CHICAGO Dec 2 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.
Peabody obtained an $800 million debtor-in-possession or DIP
financing from both secured and unsecured creditors when it
joined other large U.S. coal producers in bankruptcy in April,
hit by a drop in coal prices.
The financing included a $500 million term loan, which the
company is planning to repay, along with a $200 million bonding
accommodation facility for cleanup costs and a letter of credit
worth $100 million.
Since April there has been a significant increase in the
price of both the sea-borne thermal and metallurgical coal sold
by Peabody, one of the world's leading coal producers.
If Peabody repays the term loan before mid-January, its
bankruptcy estate will save more than $12 million in interest
payments per quarter, the company said in a filing with the U.S.
Bankruptcy Court in St. Louis. The court must approve the
"Early repayment of the term loan would result in increased
savings and flexibility as we move through the later stages of
the bankruptcy," Peabody spokesman Vic Svec said.
Peabody has said it hopes to exit bankruptcy within a year
of its 2016 filing, and the recent improvement in coal prices
has made a consensual bankruptcy reorganization more likely.
Peabody's shares, which fell to a record low of $0.55 after
its Chapter 11 filing in April, closed at $8.60 in
over-the-counter trading on Friday.
(Reporting by Tracy Rucinski; editing by Diane Craft)