Debt Restructured

Powering Peabody Energy’s Rapid Turnaround

Debt Restructured

Powering Peabody Energy’s Rapid Turnaround

Key Contacts

Carlin Adrianopoli and David J. Beckman

From the brink of bankruptcy to less debt, satisfied creditors, cash flow savings and a new capital infusion.

Peabody Energy Corporation (“Peabody”) is the world’s largest private-sector coal producer, with majority stakes in 23 mining operations in the United States and Australia.

In April 2016, the company voluntarily filed petitions under Chapter 11 to strengthen liquidity and reduce debt amid a prolonged and unprecedented downturn.

Industry pressures included a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas and ongoing regulatory challenges. In addition, a decline in the value of the Australian dollar left Peabody in a loss position on many of its hedging agreements.

FTI Consulting worked with the Peabody executive management team and board, alongside the company’s other financial and legal advisors, to navigate the bankruptcy waters and help steer the company toward a successful reorganization.

Our Impact

On April 3, 2017, Peabody emerged from Chapter 11 bankruptcy and was relisted on the New York Stock Exchange the next day. The company completed its successful reorganization in less than a year — a very rapid turnaround for a Fortune 500 company.

By the Numbers

Expertly Navigating the Bankruptcy Waters

$750M

Debtor-In-Possession (“DIP”) Financing

FTI Consulting worked with Jones Day and Lazard Frères to prepare the necessary court filings and secure $750 million in debtor-in-possession (“DIP”) financing.

$5B

Debt Load Reduction

Peabody reduced its debt load by approximately $5 billion.

6,700

Jobs Preserved

Peabody preserved the jobs of its 6,700 employees worldwide and assumed all of the company’s pension, workers’ compensation and healthcare obligations.

Peabody obtained exit financing consisting of a new $950 million senior secured term loan and $1 billion of new senior secured notes. As part of the reorganization plan, the company also received $1.5 billion in exchange for common and preferred equity in the reorganized company.

Peabody reduced its debt load by approximately $5 billion, while preserving the jobs of its 6,700 employees worldwide and assuming all of the company’s pension, workers’ compensation and healthcare obligations.

Black coal is poured from a conveyor belt onto a large pile under a clear blue sky at an industrial site.

Peabody and its affiliates were selected as the winner of the Restructuring Deal of the Year (Over $10 Billion) award by the M&A Advisor in 2018.

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Our Role

A global team of corporate finance, restructuring and mining experts

Peabody engaged FTI Consulting to assist with extensive discussions with creditors on a variety of options, including many that would have restructured debt outside of a court process.

FTI Consulting assisted the company and Lazard Frères with business planning, cash flow management, and forecasting.
FTI Consulting worked with Peabody’s treasury and finance departments to implement a comprehensive 13-week cash flow forecasting and reporting process.
In advance of the Peabody Board’s decision to seek Chapter 11 protection, FTI Consulting worked with Jones Day and Lazard to prepare the necessary court filings and secure $750 million in debtor-in-possession (“DIP”) financing, including a $250 million bonding accommodation facility to secure the company’s reclamation obligations.

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Powering Peabody Energy’s Rapid Turnaround

Powering Peabody Energy’s Rapid Turnaround

From the brink of bankruptcy to less debt, satisfied creditors, cash flow savings and a new capital infusion.

Peabody Energy Corporation (“Peabody”) is the world’s largest private-sector coal producer, with majority stakes in 23 mining operations in the United States and Australia.

Our Impact