By Jacqueline Palank
Patriot Coal Corp. (PCXCQ) Thursday said it has reached
preliminary deals to secure $576 million in bankruptcy-exit
financing.
In papers filed with the U.S. Bankruptcy Court in St. Louis,
Patriot requested permission to hire Barclays Bank PLC and Deutsche
Bank AG (DB, DBK.XE) to arrange and syndicate the financing, which
would help fund Patriot's exit from Chapter 11 protection.
The financing comes on the heels of two other crucial sources of
funding for Patriot's reorganization plans: a $250 million rights
offering, which hedge fund Knighthead Capital Management LLC has
agreed to backstop, and a $310 million settlement with Peabody
Energy Corp. (BTU).
"Exit financing is the last essential component for the debtors'
plan and ultimate successful emergence from these Chapter 11
cases," Patriot said in court papers.
The exit-financing package, which will later be subject to court
approval, would consist of a $250 million term loan, $125 million
asset-based revolving credit facility and $201 million letter of
credit facility.
The banks would be entitled to fees for their roles in arranging
the financing, although the specific amount wasn't disclosed in the
court filing.
Patriot is asking the bankruptcy court to quickly consider its
request to hire the banks at a court hearing Wednesday, when the
court will also consider the rights offering and an outline of the
company's restructuring plan.
Under the plan, Patriot plans to sell $250 million worth of new
notes and warrants in a rights offering, in which its bondholders
and unsecured creditors will be able to participate. They will also
share in a distribution of the new shares in the restructured
Patriot.
The restructuring plan proposes to cancel Patriot's current
shares, and equity holders aren't expected to receive any
payment.
The plan also incorporates the settlement with Peabody, which
promised to pay $310 million over the next four years to help fund
a trust that will administer retiree health benefits.
The settlement resolves a long-running fight over whether
Peabody or Patriot is responsible for the significant retiree
liabilities that came with the mining units that Peabody spun off
to create Patriot in 2007. Those liabilities were among the
challenges Patriot sought to address in Chapter 11 when it sought
court protection in July 2012.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Jacqueline Palank at jacqueline.palank@wsj.com.
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