Thursday, December 1, 2016

Peabody Energy Requests Extension, Gives Updates

Update in the extension request that was just filed:

The Debtors and their advisors have also dedicated significant time and resources to, among other things the following:

a)Negotiating the Plan with various creditor groups, including the Debtors' lenders party to the First Lien Credit Agreement or their successors or assigns (the "First Lien Lenders"), and an ad hoc group of senior unsecured noteholders (the "Ad Hoc Noteholders"), an ad hoc group of noteholders for the Debtors' 10.00% senior secured notes due March 2022 (the "Second Lien Noteholders' Group"), and the committee for the unsecured creditors (the "Creditors' Committee");
Notice they don't mention any negotiation with the subordinated noteholders or the equity!
"Against this backdrop of achievement, and in recognition of the complex issues still facing the Debtors, the Debtors request an order further extending the Exclusive Periods. The Debtors are engaged in active and ongoing negotiations with, among others, the Debtors' First Lien Lenders, Ad Hoc Noteholders, the Second Lien Noteholders' Group and the Creditors' Committee. The Debtors have made considerable progress in negotiating the Plan and currently intend to file the Plan by December 14, 2016. However, in an abundance of caution and in case unanticipated delays arise, the Debtors hereby seek an extension of their Exclusive Periods."
I suspect that the plan will be leaving unsecured creditors significantly impaired, and so will not provide for any distributions to the subordinated notes (currently trading at 20!) or the equity.

24 comments:

Anonymous said...

The unsecureds are trading up in the mid 70's now.

Subordinated notes at 20 cents still.

Sub notes still seem high if they are really getting zero.

C said...

Unsecureds moving up but the subordinated notes have moved down from the highs.

When the frenzy started, the ratio was 2:1, now it's 3.5 to 1.

The company said they would be filing a plan next Wednesday. In describing the creditor negotiations, the company said they are negotiating with 1L lenders, 2L and unsecured note holders, and unsecured creditors. Did not mention negotiating with subordinated note holders or with equity.

So my guess it the plan will call for 0 recovery to subordinated note holders or equity. If so, perhaps the frenzy will calm down.

Note that there is a significant amount of accrued interest (10% coupon on the $962 million of 2L notes!) since April that is senior to the subordinated notes and equity.

The 2L notes have been trading in the high 80s.

C said...

U.S. coal producer Peabody Energy Corp said it would seek court approval to repay a $500 million term loan ahead of schedule because it has enough cash to operate in bankruptcy thanks to a rise in coal prices.

http://www.reuters.com/article/us-peabody-energy-bankruptcy-idUSKBN13R2QS

Anonymous said...

Doesn't Fidelity own 2/3's of the subordinated notes?

They have a seat at the creditors table. The equity I'm not so sure about but at this point a combo of new equity, warrants isn't out of the question.

Anonymous said...

http://platform.reorg-research.com/public/article/MjgzMTA=?platform=hootsuite

CP said...

A group of Peabody Coal shareholders represented by Proskauer Rose has written a letter to the U.S. Trustee requesting the appointment of an official committee of equityholders, citing a “more than plausible case for solvency and [belying] any notion of hopeless insolvency,” according to the letter as reviewed by Reorg Research.

CP said...

Subordinated notes need to increase in value almost 5x before equity gets anything (trading low 20s).

Anonymous said...

Think the equity committee has a chance?

If so they could drag this on which only helps their cause.

CP said...

Filed today:

"The Ad Hoc Committee of Convertible Noteholders (the “Ad Hoc Committee”) whose members are the beneficial holders of, or are investment managers or advisors to funds and/or accounts that are the beneficial holders of, the 4.75% Convertible Junior Subordinated Debentures due 2066 (the “Convertible Notes”) issued by Peabody Energy Corporation and certain of its direct and indirect subsidiaries. The Ad Hoc Committee hereby submits the following statement in support of (i) the Second Motion of the Debtors for an Order Extending Their Exclusive Periods to File a Chapter 11 Plan and Solicit Acceptances Thereof [Docket No. 1676] (the “Exclusivity Motion”) and (ii) the Motion of the Debtors and Debtors in Possession for Entry of an Order (I) Authorizing the Repayment of the Debtors’ Obligations Under Their Postpetition Debtor in Possession Credit Agreement, (II) Confirming Continued Use of Case Collateral and (III) Granting Related Relief [Docket No. 1685]"

CP said...

Also: "to date, the Ad Hoc Committee has not had an opportunity to participate in such negotiations"

The subordinated noteholders.

Anonymous said...

Looks like this will get drawn out and everyone in the capital structure will get a seat at the table now.

So much for Dec 14th.

Anonymous said...

The Ad Hoc committee has been approved

Anonymous said...

Try again... an "Ad Hoc" committee by definition does not require anyone's "approval".

CP said...

Today, some counsel for the Ad Hoc subordinated noteholders were admitted pro hoc vice. Was that what you meant by "approved"?

Anonymous said...

Still a long way to go but the subordinated notes are moving higher.

http://www.kccllc.net/peabody/document/1642529161208000000000020

CP said...

The Shareholder and other holders of Peabody equity have not been invited to
participate in discussions regarding the Plan and issues of valuation, and have not been privy to the same information as creditors (despite having requested that the Debtors provide it access to that information). At the same time, the Debtors and their creditors apparently have already concluded that they do not believe there is any opportunity for the equity holders to meaningfully recover.

CP said...

On November 18, 2016, the Shareholder submitted a letter to the U.S. Trustee requesting the appointment of an Equity Committee. In that letter, the Shareholder explained, among other things, that the equity holders were not adequately represented in the negotiations regarding a plan of reorganization, and that the recent significant price increases in the coal market, among other economic factors, demonstrated that Peabody equity has value. On November 22, 2016, the Debtors responded to that letter, opposing appointment of an Equity Committee. On November 29, the Shareholder submitted to the U.S. Trustee a supplemental submission in support of its request for an Equity Committee, which the Debtors responded to on December 5, 2016. During this time, the Shareholder also participated in discussions with counsel for the U.S. Trustee to address, among other things, any concerns that the U.S. Trustee had with the appointment of an Equity Committee. On December 7, 2016, the U.S. Trustee denied the Shareholder’s request.

CP said...

The Shareholder has had discussions with counsel for the Debtors and the Creditors’ Committee since submission of its letters, but those discussions have not led the Shareholder to believe that equity holders’ interests are being adequately represented in these cases. Among other things, on November 23, 2016, the Shareholder’s advisors asked to execute a confidentiality agreement with the Debtors in order to obtain information about the proceedings and discussions between the Debtors and the various creditor constituencies. To date, the Debtors have not provided the Shareholder any access to confidential materials (even on an advisors’ eyes only basis).

CP said...

PLEASE TAKE NOTICE: The below listed motion (the “Motion”) is scheduled for hearing on January 26, 2017 at 10:00 a.m. (Central Time) at the United States Bankruptcy Court for the Eastern District of Missouri, Eastern Division, Thomas F. Eagleton Federal Building, 111 S. 10th Street, 7th Floor – North Courtroom, St. Louis, Missouri 63102: Motion of Mangrove Partners Master Fund, Ltd. for an Order Appointing an Official Committee of Equity Security Holders

CP said...

Unsecured notes low 70s, subordinated notes low 20s.

Anonymous said...

Looks like the sub notes hit 30 today.

CP said...

77 cents for the unsecured

Anonymous said...

"As a result, the Company is required to file with the Bankruptcy Court a plan of reorganization and disclosure statement with respect thereto by December 21, 2016"

CP said...

On December 14, 2016, the Bankruptcy Court approved a stipulation (the "Stipulation") filed by the Company relating to (i) an amendment to the DIP Credit Agreement (the "DIP Amendment") and (ii) an amendment to the DIP Final Order. The DIP Amendment removes any deadline in the DIP Credit Agreement by which the Debtors must file with the Bankruptcy Court a plan of reorganization or disclosure statement with respect thereto. The Stipulation amends the Final DIP Order to extend the Adequate Protection Milestones (as defined in the DIP Final Order) related to the Debtors' continued use of Cash Collateral (as defined in the DIP Final Order), including an extension of the date on which the Debtors must file a plan of reorganization and related disclosure statement to December 21, 2016. As a result, the Company is required to file with the Bankruptcy Court a plan of reorganization and disclosure statement with respect thereto by December 21, 2016.