Following this exchange with Peabody’s revolving lenders, the first lien net leverage ratio covenant under the company’s existing credit agreement has been eliminated.
Surety Agreement: The global surety agreement was also finalized, which substantially reduces contingent liquidity risk by resolving outstanding collateral requests and limiting future collateral requirements of the sureties through the maturity date of the credit agreement.
In line with this agreement, Peabody posted $75 million of letters of credit in the fourth quarter of 2020 and will post an additional $25 million of collateral per year beginning in 2021 through 2024 for the benefit of the sureties, plus other amounts in accordance with the surety agreement. Surety providers have agreed to a standstill agreement under which they have agreed not to demand any additional collateral for existing bonds; draw on letters of credit posted for the benefit of themselves; or cancel, or attempt to cancel, any existing surety bond.
Lazard served as financial advisor and Jones Day served as legal advisor to Peabody on this transaction. Houlihan Lokey Capital, Inc. served as financial advisor and Davis Polk & Wardwell LLP served as legal advisor to an ad hoc group of noteholders on this transaction. PJT Partners LP served as financial advisor and Freshfields Bruckhaus Deringer LLP served as legal advisor to the administrative agent under the credit facilities on this transaction.
Peabody (NYSE: BTU) is a leading coal producer, serving customers in more than 25 countries on six continents. We provide essential products to fuel baseload electricity for emerging and developed countries and create the steel needed to build foundational infrastructure. Our commitment to sustainability underpins our activities today and helps to shape our strategy for the future. For further information, visit PeabodyEnergy.com.
Contact:
Julie Gates
314.342.4336
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” “targets,” “would,” “will,” “should,” “goal,” “could” or “may” or other similar expressions. Forward-looking statements provide management’s current expectations or predictions of future conditions, events or results. All statements that address operating performance, events, or developments that Peabody expects will occur in the future are forward-looking statements, including the Company’s ability to consummate the Exchange Offer and Consent Solicitation and the Company’s expectations regarding future liquidity, cash flows, mandatory debt payments and other expenditures. They may also include estimates of sales targets, cost savings, capital expenditures, other expense items, actions relating to strategic initiatives, demand for the company’s products, liquidity, capital structure, market share, industry volume, other financial items, descriptions of management’s plans or objectives for future operations and descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect Peabody’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, Peabody disclaims any obligation to publicly update or revise any forward-looking statement, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are
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