Explanatory Note
Peabody Energy Corporation, a Delaware corporation, is filing this Amendment No. 1 to Current Report on Form8-K (this “Amendment”) to amend its Current Report on Form8-K, as originally filed with the U.S. Securities and Exchange Commission on June 19, 2019 (the “Original Form8-K”), solely for the purpose of filing a copy of the Implementation Agreement referenced therein as Exhibit 2.1 to the Original Form8-K and to revise the last paragraph of Item 1.01 and the exhibit index in Item 9.01 of the Original Form8-K to reflect that the Implementation Agreement is being filed as an exhibit.
Except as noted above, this Amendment does not modify or update in any way the disclosures made in the Original Form8-K.
| Item 1.01. | Entry into a Material Definitive Agreement. |
On June 18, 2019, Peabody Energy Corporation, a Delaware corporation (“Peabody”), entered into a definitive implementation agreement (the “Implementation Agreement”) with Arch Coal, Inc., a Delaware corporation (“Arch”), to establish a joint venture that will combine the respective Powder River Basin and Colorado mining operations of Peabody and Arch. Pursuant to the terms of the Implementation Agreement, Peabody will hold a 66.5% economic interest in the joint venture and Arch will hold a 33.5% economic interest. At the closing, certain of the respective subsidiaries of Peabody and Arch will enter into an Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) in substantially the form attached as an exhibit to the Implementation Agreement. Under the terms of the LLC Agreement, the governance of the joint venture will be overseen by the joint venture’s board of managers, which will initially be comprised of three representatives appointed by Peabody and two representatives appointed by Arch. Decisions of the board of managers will be determined by a majority vote subject to certain specified matters set forth in the LLC Agreement that will require a supermajority vote. Peabody, or one of its affiliates, will initially be appointed as the operator of the joint venture and will manage theday-to-day operations of the joint venture, subject to the supervision of the joint venture’s board of managers.
Formation of the joint venture is subject to customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of certain other required regulatory approvals and the absence of injunctions or other legal restraints preventing the formation of the joint venture. The obligation of Peabody to consummate the transaction is also conditioned upon Peabody having obtained consents or refinanced all outstanding indebtedness under Peabody’s existing senior secured credit facility, the indenture governing Peabody’s 6.000% Notes due 2022 and 6.375% Notes due 2025 and Peabody’s existing receivables securitization facility. The obligation of Arch to consummate the transaction is also conditioned upon (a) Arch having obtained consents or refinanced all outstanding indebtedness under Arch’s senior secured term loan facility, Arch’s inventory based revolving credit facility and Arch’s existing accounts receivable securitization facility and (b) Arch having either obtained an exemptive order from the U.S. Securities and Exchange Commission (the “SEC”) or other exemptive determination under the Investment Company Act of 1940 (the “1940 Act”). Formation of the joint venture does not require approval of the respective stockholders of either Peabody or Arch.
The Implementation Agreement contains customary representations, warranties and covenants, including an obligation for each of Peabody and Arch to use its best efforts to take all actions necessary to obtain required regulatory approvals, subject to the limitations set forth in the Implementation Agreement.
The Implementation Agreement may be terminated by mutual written agreement of Peabody and Arch and by either Peabody or Arch if, among other things, the closing has not occurred on or prior to December 18, 2020, except that (a) the right to terminate will not be available to a party whose failure to perform any of its obligations under the Implementation Agreement has been a principal cause of or resulted in the failure of the closing to occur on or prior to such date and (b) the right to terminate will not be available to Arch until June 18, 2021 if all closing conditions have been satisfied other than the receipt by Arch of an exemptive order (or other determination) under the 1940 Act.
Additionally, if the closing has not occurred on or prior to June 18, 2020 and all required regulatory approvals have not been obtained, the Implementation Agreement may be terminated by either Peabody or Arch no later than June 29, 2020 following written notice and the payment by the terminating party to thenon-terminating party of a termination fee of $40 million;provided,however, that thenon-terminating party may elect to extend the Implementation Agreement until September 18, 2020. If thenon-terminating party exercises this option to extend, the termination fee payable to thenon-terminating party by the terminating party if the closing does not occur on or prior to September 18, 2020 will be reduced to $25 million.
