Arch Coal,Inc. (OTCMKTS:ACIIQ) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
New Inventory Facility
On April27, 2017 (the Inventory Facility Closing Date), Arch
Coal,Inc. (Arch Coal, the Company or we) and certain subsidiaries
of Arch Coal entered into a new senior secured inventory-based
revolving credit facility in an aggregate principal amount of $40
million (the New Inventory Facility) with Regions Bank (Regions)
as administrative agent and collateral agent (in such capacities,
the Agent), as lender and swingline lender (in such capacities,
the Lender) and as letter of credit issuer. Availability
under the New Inventory Facility is subject to a borrowing base
consisting of (i)85% of the net orderly liquidation value of
eligible coal inventory, (ii)the lesser of (x)85% of the net
orderly liquidation value of eligible parts and supplies
inventory and (y)35% of the amount determined to clause (i), and
(iii)50% of Arch Coals Eligible Cash (defined in the New
Inventory Facility), subject to reduction for reserves imposed by
Regions.
The commitments under the New Inventory Facility will terminate
on the date that is the earliest to occur of (i)the third
anniversary of the Inventory Facility Closing Date, (ii)the date,
if any, that is 364 days following the first day that Liquidity
(defined in the New Inventory Facility and consistent with the
definition in the Extended Securitization Facility (as defined
below)) is less than $250,000,000 for a period of 60 consecutive
days and (iii)the date, if any, that is 60 days following the
maturity, termination or repayment in full of the Extended
Securitization Facility.
Revolving loan borrowings under the New Inventory Facility bear
interest at a per annum rate equal to, at the option of Arch
Coal, either at the base rate or the London interbank offered
rate plus, in each case, a margin ranging from 2.25% to 2.50% (in
the case of LIBOR loans) and 1.25% to 1.50% (in the case of base
rate loans) determined using a Liquidity-based grid. Letters of
credit under the New Inventory Facility are subject to a fee in
an amount equal to the applicable margin for LIBOR loans, plus
customary fronting and issuance fees.
All existing and future direct and indirect domestic subsidiaries
of Arch Coal, subject to customary exceptions, will either
constitute co-borrowers under or guarantors of the New Inventory
Facility (collectively with Arch Coal, the Loan Parties). The New
Inventory Facility is secured by first priority security
interests in the ABL Priority Collateral (defined in the New
Inventory Facility) of the Loan Parties and second priority
security interests in substantially all other assets of the Loan
Parties, subject to customary exceptions (including an exception
for the collateral that secures the Extended Securitization
Facility).
Arch Coal has the right to prepay borrowings under the New
Inventory Facility at any time and from time to time in whole or
in part without premium or penalty, upon written notice, except
that any prepayment of such borrowings that bear interest at the
LIBOR rate other than at the end of the applicable interest
periods therefor shall be made with reimbursement for any funding
losses and redeployment costs of the Lender resulting therefrom.
The New Inventory Facility is subject to certain usual and
customary mandatory prepayment events, including non-ordinary
course asset sales or dispositions, subject to customary
thresholds, exceptions (including exceptions for required
prepayments under Arch Coals term loan facility) and reinvestment
rights.
The New Inventory Facility contains customary affirmative
covenants and representations, including certain cash management
and reporting requirements that are customary for asset-based
credit facilities.
The New Inventory Facility also contains customary negative
covenants, which, among other things, and subject to certain
exceptions, include restrictions on (i)indebtedness, (ii)liens,
(iii)liquidations, mergers, consolidations and acquisitions,
(iv)disposition of assets or subsidiaries, (v)affiliate
transactions, (vi)creation or ownership of certain subsidiaries,
partnerships and joint ventures, (vii)continuation of or change
in business, (viii)restricted payments, (ix)prepayment of
subordinated and junior lien indebtedness, (x)restrictions in
agreements on dividends, intercompany loans and granting liens on
the collateral, (xi)loans and investments, (xii)sale and
leaseback transactions, (xiii)changes in organizational documents
and fiscal year and (xiv)transactions with respect to bonding
subsidiaries. The New Inventory Facility also includes a
requirement to maintain Liquidity equal to or exceeding
$175,000,000.
The New Inventory Facility permits the Extended Securitization
Facility to remain in place.
The New Inventory Facility contains customary events of default,
subject to customary thresholds and exceptions, including, among
other things, (i)non-payment of principal and non-payment of
interest and fees, (ii)a material inaccuracy
of a representation or warranty at the time made, (iii)a
failure to comply with any covenant, subject to customary grace
periods in the case of certain affirmative covenants,
(iv)cross-events of default to indebtedness of at least
$50,000,000, (v)cross-events of default to surety, reclamation
or similar bonds securing obligations with an aggregate face
amount of at least $50,000,000, (vi)uninsured judgments in
excess of $50,000,000, (vii)any loan document shall cease to be
a legal, valid and binding agreement, (viii)uninsured losses or
proceedings against assets with a value in excess of
$50,000,000 (or, in the case of ABL Priority Collateral, in
excess of $5,000,000), (ix)ERISA events, (x)a change of control
or (xi)bankruptcy or insolvency proceedings relating to the
Arch Coal or any material subsidiary of the Arch Coal.
The description of the New Inventory Facility is qualified in
its entirety by reference to the full text of the New Term
Inventory Facility, which is incorporated by reference herein.
A copy of the New Inventory Facility is included herein as
Exhibit10.1.
Securitization Facility
On April27, 2017 (the Securitization Facility Closing Date),
Arch Coal extended and amended its existing trade accounts
receivable securitization facility provided to Arch Receivable
Company, LLC, a special-purpose entity that is a wholly owned
subsidiary of Arch Coal (Arch Receivable) (the Extended
Securitization Facility), which supports the issuance of
letters of credit and requests for cash advances. The amendment
to the Extended Securitization Facility decreases the borrowing
capacity from $200 million to $160 million and extends the
maturity date to the date that is three years after the
Securitization Facility Closing Date. to the Extended
Securitization Facility, Arch Receivable also agreed to a
revised schedule of fees payable to the administrator and the
providers of the Extended Securitization Facility.
The Extended Securitization Facility will terminate at the
earliest of (i)three years from the Securitization Facility
Closing Date, (ii)if the Liquidity (defined in the Extended
Securitization Facility and consistent with the definition in
the New Inventory Facility) is less than $175,000,000 for a
period of 60 consecutive days, the date that is the 364th day
after the first day of such 60 consecutive day period and
(iii)the occurrence of certain predefined events substantially
consistent with the existing transaction documents. Under the
Extended Securitization Facility, Arch Receivable, Arch Coal
and certain of Arch Coals subsidiaries party to the Extended
Securitization Facility have granted to the administrator of
the Extended Securitization Facility a first priority security
interest in eligible trade accounts receivable generated by
such parties from the sale of coal and all proceeds thereof.
The description of the Extended Securitization Facility is
qualified in its entirety by reference to the full text of the
Extended Securitization Facility, which is incorporated by
reference herein. A copy of the Extended Securitization
Facility is included herein as Exhibits 10.2 to 10.4.
Item 2.02 Results of Operations and Financial
Condition
On May2, 2017, the Company issued a press release containing
its first quarter 2017 results and announcing a new share
repurchase program and a quarterly dividend. A copy of the
press release is attached hereto as Exhibit99.1.
The information contained in this Item 2.02, including
Exhibit99.1, is being furnished and shall not be deemed filed
for purposes of Section18 of the Securities Exchange Act of
1934, as amended (the Exchange Act), or otherwise subject to
the liabilities of that section. The information in this Item
2.02, including Exhibit99.1, shall not be incorporated by into
any filing under the Securities Act of 1933, as amended (the
Securities Act), or the Exchange Act, except as shall be
expressly set forth by specific reference in such a filing.
Item 2.03Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
The information regarding the New Inventory Facility and the
Extended Securitization Facility set forth in Item 1.01 of this
Report is incorporated by reference herein.
Item 8.01 Other Events
On April27, 2017, the board of directors of Arch Coal
authorized a new share repurchase program for up to $300
million in shares of its common stock, with no time limit on
the program. The timing of any purchases, and the ultimate
number of shares to be purchased, will depend on market
conditions. The Company had 25,021,079 common shares
outstanding as of April27, 2017.
The purchases under the new share repurchase program may be
made in the open market or through privately negotiated
transactions from time to time in accordance with applicable
laws, rulesand regulations. Repurchases may also be made to a
Rule10b5-1 plan, which, if adopted by Company, would permit
shares to be repurchased in accordance with pre-determined
criteria when the Company might otherwise be prohibited from
doing so under insider trading laws or because of self-imposed
trading blackout periods. The share repurchase program may be
amended, suspended or discontinued at any time and does not
commit the Company to repurchase shares of its common stock.
The actual number and value of the shares to be purchased will
depend on the performance of the Companys stock price and other
market conditions.
On April27, 2017, the board of directors also authorized a new
quarterly common stock cash dividend of $0.35 per share. The
dividend will be paid on June15, 2017 to stockholders of record
on May31, 2017.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits
The following exhibits are attached hereto and filed herewith.
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Exhibit No. |
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Description |
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10.1 |
Credit Agreement, dated as of April27, 2017, among Arch |
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10.2 |
First Amendment to Third Amended and Restated Receivables |
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10.3 |
Second Amendment to the Second Amended and Restated |
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10.4 |
First Amendment to the Second Amended and Restated Sale |
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99.1 |
Press Release containing Arch Coals first quarter 2017 |
About Arch Coal, Inc. (OTCMKTS:ACIIQ)
Arch Coal, Inc. is a coal producer. The Company is engaged in the production of thermal and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and steel producers both in the United States and around the world. Its segments include the Powder River Basin (PRB) segment containing the Company’s primary thermal operations in Wyoming; the Metallurgical (MET) segment containing the Company’s metallurgical operations in West Virginia, Kentucky, and Virginia, and the Other Thermal segment containing the Company’s supplementary thermal operations in Colorado, Illinois, and the Coal Mac thermal operation in West Virginia. The Company operates mining complexes in West Virginia, Kentucky, Virginia, Illinois, Wyoming and Colorado. It sells all of its coal to power plants, steel mills and industrial facilities. As of December 31, 2016, it operated 12 mines located in each of the coal-producing regions of the United States. Arch Coal, Inc. (OTCMKTS:ACIIQ) Recent Trading Information
Arch Coal, Inc. (OTCMKTS:ACIIQ) closed its last trading session 00.0000 at 0.0000 with shares trading hands.
