By Dow Jones Business News, October 31, 2013, 01:44:00 PM EDT
By Jacqueline Palank
Patriot Coal Corp. (PCXCQ) Thursday said it has reached preliminary deals to secure $576 million in bankruptcy-exit
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
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
Write to Jacqueline Palank at email@example.com.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.