Cloud Peak Energy Inc. (NYSE:CLD) Files An 8-K Regulation FD Disclosure
Item 7.01 Regulation FD Disclosure
Closing of Tender Offer and Borrowing
On June 14, 2019, Cloud Peak Energy Inc. (the Company) launched a tender offer providing the opportunity for eligible holders of record as of May 17, 2019 of Second Lien Senior Secured Notes due 2021 (the 2021 Notes) issued by Cloud Peak Energy Resources LLC and Cloud Peak Energy Finance Corp., to (i) participate as a lender in the Companys and certain of its direct and indirect subsidiaries (the Cloud Peak Entities) $35.0 million Superpriority Senior Secured Priming Debtor-in-Possession Credit Agreement (the DIP Credit Agreement) on a pro rata basis up to such holders percentage ownership of the outstanding 2021 Notes (such loans referred to as New Money Loans), and (ii) to exchange, or roll-up a principal amount of their 2021 Notes equal to 80% of their commitments as a lender under the DIP Credit Agreement for an equal amount of additional loans under the DIP Credit Agreement (the Roll-Up Loans).
On August 1, 2019, the transactions contemplated by tender offer closed, and the Cloud Peak Entities borrowed $25.0 million under the DIP Credit Agreement. Such borrowing, together with the $10.0 million borrowing on May 16, 2019, results in the total amount of outstanding principal indebtedness under the DIP Credit Agreement of $63.0 million, consisting of $35.0 million of New Money Loans and $28.0 million in Roll-Up Loans.
Filing of Monthly Operating Report and Anticipated Impairment of Assets
On July 31, 2019, the Cloud Peak Entities filed their monthly operating report (the Monthly Operating Report) for the month ended June 30, 2019 with the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court). The Monthly Operating Report is available on Prime Clerks website at https://cases.primeclerk.com/cloudpeakenergy/Home-DocketInfo [Docket No. 543]. The values for assets contained in the Monthly Operating Report are book values as of the end of the month for the reporting period. Based on the information the Company has received to date during the auction process for the sale of all or substantially all of the Cloud Peak Entities assets, the Company expects the disposition of such assets to the auction and sale process to vary materially and adversely from the stated book value of the Cloud Peak Entities assets as of June 30, 2019 contained in the Monthly Operating Report. As a result, in connection with the ongoing preparation of the Companys second quarter 2019 Form 10-Q, the Company is evaluating the Cloud Peak Entities assets for impairment and expects to materially impair these assets. The Company is unable to quantify the amount of the impairment until the bankruptcy auction process (including the hearing before the Bankruptcy Court relating to the sale approval of any winning auction bids) is completed. Thus, unless otherwise noted, the Monthly Operating Report reflects the carrying values of the assets as recorded on the Cloud Peak Entities books and records as of the end of the month and are not based upon any estimate of their current market value. The Company reserves its right to amend or adjust the value of each asset set forth in the Monthly Operating Report.
Currently, the bankruptcy auction for the Cloud Peak Entities assets is expected to take place on August 8, 2019, and the hearing before the Bankruptcy Court relating to sale approval of any winning auction bids is expected to take place on August 19, 2019, which dates are subject to change.
Any financial information included in the Monthly Operating Report (the financial information) was not prepared with a view toward public disclosure or compliance with the published guidelines of the Securities and Exchange Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. The financial information does not purport to present the Companys financial condition in accordance with accounting principles generally accepted in the United States. The Companys independent accountants have not examined, compiled or otherwise applied procedures to the financial information and, accordingly, do not express an opinion or any other form of assurance with respect to the financial information. The inclusion of the financial information herein should not be regarded as an indication that the Company or its affiliates or representatives consider the financial information to be a reliable prediction of future events, and the financial information should not be relied upon as such. Neither the Company nor any of its affiliates or representatives has made or makes any representation to any person regarding the ultimate outcome of the Companys restructuring compared to the financial information, and none of them undertakes any obligation to publicly update the projections to reflect circumstances existing after the date when the financial information was made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the financial information are shown to be in error.