Friday, September 23, 2016

Arch Coal Confirmation of Plan of Reorganization

From an 8-K filing last week:

  • On September 13, 2016, the Bankruptcy Court entered an order, Docket No. 1324 (the “Confirmation Order”), attached hereto as Exhibit 2.1, confirming the Debtors’ Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated September 11, 2016 (the “Plan”). The Plan incorporates by reference certain documents filed with the Bankruptcy Court as part of the “Plan Supplement.” A copy of the Plan is attached hereto as Exhibit 2.2.
  • The Plan will not become effective until certain conditions are satisfied or waived, including, (a) the documents governing the Reorganized Debtors’ new $326.5 million first lien debt facility (the “New First Lien Debt Facility”) shall have been duly executed and delivered by the Reorganized Debtors parties thereto, and all conditions precedent to the consummation of the New First Lien Debt Facility shall have been waived or satisfied in accordance with the terms thereof, and the closing of the New First Lien Debt Facility shall have occurred; (b) the Debtors’ existing securitization facility shall be reinstated on terms substantially as set forth in the Plan Supplement; (c) all documents and agreements necessary to implement the Plan, including the Plan Supplement and the Confirmation Order, shall have been executed; and (d) the Debtors shall have received all authorizations, consents, regulatory approvals, rulings, letters, no-action letters, opinions or documents that are necessary to implement the Plan and that are required by law, regulation or order. The date on which all conditions to the effectiveness of the Plan have been satisfied or waived will be the “Effective Date” of the Plan. It is possible that amendments could be made to the Plan prior to effectiveness.
  • Arch Coal currently has 21,298,872 shares of common stock, par value $0.01 per share, issued and outstanding. On the Effective Date, all outstanding shares of Arch Coal’s common stock will be cancelled and extinguished, and any rights of any holder in respect thereof, will be deemed cancelled, discharged and of no force or effect.
  • On the Effective Date, Reorganized Arch Coal will file with the Secretary of State of the State of Delaware an Amended & Restated Certificate of Incorporation authorizing the issuance of 25 million shares of New Common Stock, divided among Class A common stock, par value $0.01 per share (“Class A Common Stock”), Class B common stock, par value $0.01 per share (“Class B Common Stock”), and 50,000,000 shares of preferred stock, par value $0.01 per share.  The Class B Common Stock will have identical terms to the Class A Common Stock, except that the Class B Common Stock will not be listed on any national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
  • On the Effective Date, Reorganized Arch Coal will issue or reserve for issuance shares of New Common Stock for distribution in accordance with the Plan. Pursuant to the Plan, 25 million shares of New Common Stock will be issued to the holders of allowed claims on account of the First Lien Credit Facility and holders of allowed claims on account of Prepetition Notes, as discussed above under “Treatment of Claims.”  Reorganized Arch Coal will reserve for issuance the maximum number of shares of Class A Common Stock issuable upon exercise and settlement of the New Warrants (assuming all New Warrants are physically settled) and a sufficient number of shares pursuant to honor incentive awards to be granted under the Management Incentive Plan.
Amazingly, the stock is still trading for 40 cents.

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