The bankrupt company said in court papers that falling prices for metallurgical coal had cut into the company’s earnings forecasts over the past year.
Patriot is seeking approval to amend the earnings before interest, taxes, depreciation, and amortization (EBITDA) threshold of a $375 million loan.
“As the court is aware, in the past year the debtors have had to contend with continuous and sharp declines in the demand for, and price of, metallurgical coal, and the negative effects that such downward trends have had on the debtors’ internal financial forecasts,” Patriot said in papers filed in Manhattan Bankruptcy Court July 30.
“Accordingly, because these downward trends in the coal markets have continued unabated, the debtors currently believe there is a substantial likelihood that, if the amendment is not approved, they may not comply with the current EBITDA thresholds beginning in the third quarter of 2013.”
Under the previous loan agreement, Patriot was required to have a minimum of consolidated earnings of $205m by December 31. The proposed amendment would drop the threshold to $101.3m.
“By decreasing the EBITDA Thresholds, the amendment, if consented to by the required lenders, will prevent the debtors from potentially defaulting under the DIP Facilities and thereby allow the debtors to continue to access the liquidity necessary to continue forward on a path to emergence from chapter 11 within the current timeline,” the filing stated.
