Judge plans to confirm Peabody’s reorganization plan

Bankrupt mining giant Peabody Energy announced last week the judge presiding over the company's Chapter 11 process in the U.S. Bankruptcy Court for the Eastern District of Missouri has ruled he intends to confirm the company's amended plan of reorganization.

Judge Barry S. Schermer, in his 197-page ruling (reviewed by Kallanish Energy) confirmed the amended plan after finalization of language regarding a settlement with the U.S. Department of Justice.

The plan, which received a 93% approval rate from creditors and unanimous acceptance by all 20 voting classes, spells out Peabody's strategy to emerge from Chapter 11 with a strong balance sheet.

The St. Louis-based company expects to emerge from Chapter 11 in early April, less than one year after filing for bankruptcy protection from creditors.

"Today's (Friday’s) confirmation marks a major milestone in Peabody's journey and one of the final steps toward our successful emergence from Chapter 11," said Peabody CEO Glenn Kellow.

In the past year, Peabody has reduced pre-filing debt levels by more than $5 billion, lowered fixed charges related to hedging and take-or-pay commitments, decreased royalty payments and sold non-core assets, according to the company.

Peabody's plan of reorganization will become effective upon emergence, at which time the company's existing equity under the ticker symbol “BTUUQ” will be canceled with no value.  Following emergence, Peabody expects its new equity to trade on the New York Stock Exchange.

Jones Day is serving as legal advisor to Peabody, Lazard Fréres is acting as its investment banker and financial advisor, and FTI Consulting is serving as its restructuring advisor.

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