US Bankruptcy Court judge Shelley Chapman in New York City, Dow Jones Newswires reported Friday, gave final approval to the financing from Citigroup, Barclays and Bank of America, after the court’s attorneys worked out loan term concerns with the company’s legal representatives.
Chapman reportedly said the loan approval would not be official until lenders syndicated the line, and at the time of the report that was still pending. Patriot can request the order be entered once that is completed.
Davis Polk & Wardwell's Marshall Huebner told the news service the agreement was “great news” for the producer, as the loan would have lower fees and a lower interest rate than the initial line presented.
Chapman was the same judge who last month gave the green-light to Patriot’s use of $677 million of the debtor-in-possession loan in July. This was despite reported reservations about a “roll-up” of $302 million in existing debt with the loan.
Patriot said at the time of the July approval that it would use the funds to refinance debt and take other needed actions to keep operations and shipments running as normal during the bankruptcy proceedings.
Dow Jones also reported the judge approved Patriot’s requests to continue paying foreign creditors, taxes, and its 4000 workers.
On July 9, Patriot Coal became the first US coal producer to file for bankruptcy protection since North American coal prices started to plummet.
Its business took multiple hits, including the cancellation of customer contracts, lower thermal coal prices and rising expenditures for environmental and other liabilities. Neither production cuts nor an export sales push were of help to the troubled company.
Patriot chairman and chief executive officer Irl Engelhardt said the company’s existing capital structure kept it from making the necessary adjustments to “achieve long-term success”
“Our objective is to use the reorganization process to address important issues in an orderly way and make the company stronger and more competitive,” he said at the time.
Patriot was spun off from Peabody Energy in 2007, and had been one of the largest coal miners east of the Mississippi River.
It operates 13 mining complexes in West Virginia and Kentucky and controls about 1.9 billion short tons of proven and probable reserves.
