Wow, this just in from Peabody regarding inability to file a Form 10-K for 2015:
Peabody Energy Corporation and its subsidiaries (the “Company”) has experienced unexpected delays in the filing of its Annual Report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”) within the prescribed time period due to delays experienced in completing the Company’s financial statements and certain disclosures required in the Form 10-K. The delays could not be eliminated without unreasonable effort or expense.
As previously disclosed, on November 20, 2015, the Company entered into a purchase and sale agreement (the “Purchase Agreement”) with a subsidiary of Bowie Resource Holdings, LLC (the “Purchaser”) pursuant to which the Company agreed to sell its El Segundo and Lee Ranch coal mines and related assets located in New Mexico and Twentymile Mine in Colorado (the “Four Star Operations”). The closing of the sale of the Four Star Operations (the “Transaction”) is scheduled to occur during the first quarter of 2016, subject to the satisfaction or waiver of closing conditions. The Purchase Agreement does not contain a financing condition. However, subject to the terms of the Purchase Agreement, the Purchaser has agreed to use its reasonable best efforts to arrange and obtain debt and equity financing in an amount sufficient to consummate the Transaction. The Purchase Agreement includes a reverse termination fee of $20 million payable to the Company if the Company terminates the Purchase Agreement because the Purchaser failed to obtain financing sufficient to consummate the Transaction.
If the Company’s reported Adjusted EBITDA, which is defined in Exhibit A, and other sources of earnings or adjustments used to calculate Consolidated EBITDA, as defined in the Company’s senior secured credit agreement entered into in 2013 (as amended, the “2013 Credit Facility”), falls below its Consolidated Net Cash Interest Charges, as defined in the 2013 Credit Facility, during 2016, the Company will not be in compliance with its Consolidated Interest Coverage Ratio, as defined in the 2013 Credit Facility. Other sources of earnings or adjustments to the Company’s reported Adjusted EBITDA provided for under this covenant may include, in certain instances, cash proceeds from asset monetization activities. The receipt of proceeds from the Transaction described above is a substantial disposition of assets that impacts the Company’s forecasted covenant compliance and its independent registered public accounting firm’s going concern assessment. Based on an analysis of a range of 2016 financial projections and continued coal market deterioration, the Company believes there is substantial doubt as to whether the Company can comply with its financial covenants under its 2013 Credit Facility without consummation of the Transaction.
Unless the Transaction is consummated before the issuance of the Company’s audited financial statements for the year ended December 31, 2015, the Company believes its independent registered public accounting firm will be required to issue an audit opinion with a going concern uncertainty paragraph. Further, the inclusion of an audit opinion with a going concern uncertainty paragraph within the Company’s financial statements would constitute an event of default under the credit agreement governing the 2013 Credit Facility after the expiration of any applicable grace period.
If the Company experiences or expects to experience a financial covenant breach or other default, it could request an amendment to, or waiver of, the covenant from its lenders. If the Company is unable to obtain waivers from its lenders, the 2013 Credit Facility and certain of its other debt arrangements would be in default and the debt owed under such agreements could be accelerated.
Due to the impact of the Transaction on the Company’s financial statements, the related audit opinion and the required Form 10-K disclosures and their consequent impact on the Company’s compliance with the terms and covenants of its 2013 Credit Facility, the Company is unable to file the Form 10-K without unreasonable effort or expense. The Company expects to file the Form 10-K within the time period prescribed in Rule 12b-25 promulgated under the Securities Exchange Act of 1934.