(RTTNews.com) - Cloud Peak Energy Inc. ( CLD ) said that its board has commenced a review of strategic alternatives, including a potential sale of the Company.
The Company has engaged J.P. Morgan Securities LLC as its financial advisor and Allen & Overy LLP as legal counsel in connection with the strategic alternatives review.
In connection with this strategic review process, the Compensation Committee of the Board approved an executive retention program through July 2020 for the senior management team.
In a separate press release, Cloud Peak Energy announced that Cloud Peak Energy Resources LLC, a wholly owned subsidiary of Cloud Peak Energy Inc., provided PNC Bank, National Association with notice to terminate the Credit Agreement with PNC Bank, National Association, as administrative agent, and a syndicate of lenders, originally dated as of February 21, 2014. The termination of the Credit Agreement is effective as of November 15, 2018.
As disclosed in the Company's Quarterly Report on Form 10-Q for the period ending September 30, 2018, the Company has been evaluating potential alternatives with respect to its Credit Agreement to achieve the Company's business objectives and priorities, including exercising the Company's right to terminate the Credit Agreement. As of September 30, 2018, the Credit Agreement availability was reduced to $16.2 million of borrowing capacity based upon the quarterly financial covenant calculations.
As of September 30, 2018, the Company had $109.5 million in cash and cash equivalents. The Company has no outstanding borrowings or undrawn letters of credit under the Credit Agreement, the Company has not historically used the Credit Agreement as a source of working capital and the Company had no current plans to draw on the Credit Agreement. The Credit Agreement would have also required CPE Resources to pay over $3.0 million in additional commitment and administrative fees during the remaining term of the Credit Agreement through May 2021, which will now be avoided.
The termination of the Credit Agreement does not result in a default under CPE Resources' Accounts Receivable Securitization Program or the indentures for CPE Resources' 12.00% second lien senior notes due 2021 or 6.375% senior notes due 2024. As a result of the termination of the Credit Agreement, the Company will record a non-cash write off of certain deferred financing costs in the amount of approximately $4.1 million.
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