Restructuring Support Agreement

On March 10, 2020, Foresight Energy LP (“FELP”), a limited partnership incorporated under the laws of Delaware, Foresight Energy GP LLC, the general partner of FELP, (“FEGP”), and each of FELP’s affiliates party thereto (collectively with FELP and FEGP, the “FELP RSA Parties” or the “Company”) entered into a Restructuring Support Agreement (the “RSA”) with holders of over 69% in aggregate principal amount of the Company’s outstanding senior secured first-priority credit facility (the “Consenting First Lien Lenders”) and holders of over 82% in aggregate principal amount of the Company’s outstanding senior secured notes (the “Consenting Second Lien Noteholders” and together with the Consenting First Lien Lenders, the “Consenting Creditors”). As set forth in the RSA, including in the term sheet attached thereto (including all exhibits, annexes and schedules attached thereto, the “Term Sheet”), the FELP RSA Parties and the Consenting Creditors (collectively, the “RSA Parties”) have agreed to the principal terms of a proposed financial restructuring (the “Restructuring”) of the Company. The Restructuring is contemplated to be implemented through a Chapter 11 plan of reorganization (the “Plan”). As further described below, on March 10, 2020, the Company filed voluntary petitions for relief under Title 11 of the United States Code (collectively, the “Chapter 11 Cases”) to effect the Plan.

The RSA contemplates a comprehensive deleveraging of the Company’s balance sheet and an approximately $1.1 billion reduction of the Company’s funded debt. Specifically, the RSA and Term Sheet provide, in pertinent part, as follows:

The RSA includes certain milestones for the progress of the Chapter 11 Cases, which include the dates by which the FELP RSA Parties are required to, among other things, obtain certain court orders and consummate the Restructuring. In addition, the RSA Parties will have the right to terminate the RSA (and their support for the Restructuring) under certain circumstances, including, in the case of the FELP RSA Parties, if the board of directors, board of managers or such similar governing party of any FELP RSA Party determines in good faith that performance under the RSA would be inconsistent with its fiduciary duties. Accordingly, no assurance can be given that the Restructuring described in the RSA and the Term Sheet will be consummated.

The foregoing description of the RSA does not purport to be complete and is qualified in its entirety by reference to the full text of the RSA, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference in this Item 1.01.

The Company also entered into support agreements with certain of its principal commercial counterparties. These agreements are subject to termination under certain circumstances, including, in the case of the Company, if the board of directors, board of managers or such similar governing party of the Company determines in good faith that performance under the support agreements would be inconsistent with its fiduciary duties. Accordingly, no assurance can be given that the support agreements will be consummated.

Item 1.03 Bankruptcy or Receivership.

On March 10, 2020, the Company filed the Chapter 11 Cases in the United States Bankruptcy Court for the Eastern District of Missouri (the “Bankruptcy Court”) and filed the Plan with the Bankruptcy Court.

The Company has filed a motion with the Bankruptcy Court seeking joint administration of the Chapter 11 Cases under the caption In re Foresight Energy LP, et al. The Company will continue to operate its businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

Additional information about the Chapter 11 Cases may be obtained by visiting http://cases.primeclerk.com/foresight or by calling +1(212) 257-5450.

Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement.

The filing of the Chapter 11 Cases described above in Item 1.03 constitutes an event of default that accelerated the Company’s obligations under the following debt instruments (the “Debt Instruments”):

The Debt Instruments provide that, as a result of the Chapter 11 Cases, the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.

Item 7.01 Regulation FD Disclosure.

Item 2.02 Results of Operations and Financial Condition.

to certain confidentiality agreements the Company has entered into with certain Consenting Creditors (the “Confidentiality Agreement Parties”), the Company agreed to publicly disclose certain information previously provided to the Confidentiality Agreement Parties on a confidential basis (the “Cleansing Materials”). Copies of the Cleansing Materials are attached as Exhibit 99.1 to this Form 8-K. The description in this Form 8-K of the Cleansing Materials do not purport to be complete and are qualified in their entirety by reference to the complete text of the Cleansing Materials.

The information in the Cleansing Materials is dependent upon numerous assumptions with respect to commodity prices, production, development capital, exploration capital, operating expenses, availability and cost of capital and performance as set forth in the Cleansing Materials. Any financial projections or forecasts included in the Cleansing Materials were not prepared with a view toward public disclosure or compliance with the published guidelines of the Securities and Exchange Commission (the “SEC”) or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. The projections do not purport to present the Company’s financial condition in accordance with accounting principles generally accepted in the United States. The Company’s independent accountants have not examined, compiled or otherwise applied procedures to the projections and, accordingly, do not express an opinion or any other form of assurance with respect to the projections. The inclusion of the projections herein should not be regarded as an indication that the Company or its representatives consider the projections to be a reliable prediction of future events, and the projections should not be relied upon as such. Moreover, recent volatility in commodity and financial markets, as well as continuing turmoil in the global economy make any assumptions and projections inherently unreliable. Neither the Company nor any of its representatives has made or makes any representation to any person regarding the ultimate outcome of the Company’s proposed restructuring or its future operations compared to the projections, and none of them undertakes any obligation to publicly update the projections to reflect circumstances existing after the date when the projections were made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the projections are shown to be in error.

The Cleansing Materials also include certain preliminary information regarding the quarter ended December 31, 2019. The preliminary financial data for the three-month period ended December 31, 2019 included in the Cleansing Materials has been prepared by and is the responsibility of, management. Management has not yet completed its financial close, and the audit of such information is not yet complete. Accordingly, the information presented is subject to change as a result of the closing and audit process, and such changes could be material. Ernst & Young LLP, the Company’s independent registered public accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary financial data, and accordingly, Ernst & Young LLP does not express an opinion or any form of assurance with respect thereto.

The Cleansing Materials also include information about Adjusted EBITDA. Adjusted EBITDA is a non-GAAP supplemental financial measure that management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

The Company defines Adjusted EBITDA as net income (loss) before interest, income taxes, depreciation, depletion, amortization and accretion. Adjusted EBITDA is also adjusted for equity-based compensation, losses/gains on commodity derivative contracts, settlements of derivative contracts, contract amortization and write-off, a change in the fair value of the warrant liability and material nonrecurring or other items, which may not reflect the trend of future results. As it relates to commodity derivative contracts, the Adjusted EBITDA calculation removes the total impact of derivative gains/losses on net income (loss) during the period and then adds/deducts to Adjusted EBITDA the amount of aggregate settlements during the period. Adjusted EBITDA also includes any insurance recoveries received, regardless of whether they relate to the recovery of mitigation costs, the receipt of business interruption proceeds, or the recovery of losses on machinery and equipment.

The Company believes the presentation of Adjusted EBITDA provides useful information to investors in assessing the Company’s financial condition and results of operations. Adjusted EBITDA should not be considered an alternative to net (loss) income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with U.S. GAAP, nor should Adjusted EBITDA be considered an alternative to operating surplus, adjusted operating surplus or other definitions in the Company’s partnership agreement. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, of the items that affects net (loss) income. Additionally, because Adjusted EBITDA may be defined differently by other companies in the industry, and the Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, the utility of such a measure is diminished.

The Cleansing Materials reference Adjusted EBITDA for the quarter ended December 31, 2019 and forward-looking estimates of Adjusted EBITDA projected to be generated by the Company during the year ending December 31, 2020 and

beyond. A reconciliation of Adjusted EBITDA to U.S. GAAP net income (loss) for any period is not provided because U.S. GAAP net income (loss) is not practical to assess due to non-cash items that have not been finalized for the period ended December 31, 2019, unknown variables and uncertainty related to future results. In recent years, the Company has recognized significant asset impairment charges, transition and reorganization costs, losses on early extinguishment of debt, and debt restructuring costs. While these items affect U.S. GAAP net income (loss), they are generally excluded from Adjusted EBITDA. Therefore, these items do not materially impact the Company’s ability to forecast Adjusted EBITDA.

On March 10, 2020, FELP issued a press release announcing the signing of the RSA and the commencement of the Chapter 11 Cases, a copy of which is attached as Exhibit 99.2 hereto and is incorporated by reference herein.

The information included in this Form 8-K under Item 7.01, Item 2.02 and Exhibit 99.1 and Exhibit 99.2 attached hereto is being furnished and shall not be deemed “filed” for purposes of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing. The filing of this Current Report on Form 8-K (including the exhibit hereto or any information included herein or therein) shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

For additional information regarding known material factors that could cause our actual results to differ from those contained in or implied by forward-looking statements, please see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 27, 2019 and subsequent Quarterly Reports on Form 10-Q. In addition, our actual results could be affected by the risks and uncertainties relating to the bankruptcy filing by the Company and a variety of other factors, including but not limited to, (i) market demand for coal and electricity; (ii) geologic conditions, weather and other risks of coal mining that are beyond our control; (iii) claims and litigation brought against us, (iv) the coverage provided by our insurance against certain liabilities; (v) our ability to extend existing long-term coal supply agreements or enter into new agreements in the future; (vi) an increase in competition within our industry and with producers of competing energy sources; (vii) the accuracy with which we are able to estimate our coal reserves and changes in the value of our proven and probable coal reserves; (viii) availability and pricing of mining and other industrial supplies; (ix) negotiation of labor contracts, employee relations and workforce availability; (x) transportation availability, performance and costs; (xi) loss of key customers; (xii) our ability to obtain or renew surety bonds on acceptable terms; (xiii) possibility of strikes or other work stoppages at our one unionized mine; (xiv) obligations relating to benefits for retired employees and under pension plans; (xv) our ability to retain key executives and attract and retain qualified employees; (xvi) the impact of future legislation and changes in regulations, governmental policies and taxes, including those affecting permitting, mine safety and health, and land rights of mining operators and those aimed at reducing greenhouse gas emissions; (xvii) the Company’s ability to obtain approval by the Bankruptcy Court of a Chapter 11 plan or any other plan of reorganization, including the treatment of the claims of the Company’s lenders and trade creditors, among others; (xviii) the Company’s ability to obtain approval with respect to motions in the Chapter 11 Cases and the Bankruptcy Court’s rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; (xix) the length of time the Company will operate under the Chapter 11 Cases; (xx) risks associated with third-party motions in the Chapter 11 Cases, which may interfere with the Company’s ability to develop and consummate a plan of reorganization; (xxi) the potential adverse effects of the Chapter 11 Cases on the Company’s liquidity, results of operations or business prospects; (xxii) the ability to execute the Company’s business and restructuring plan; (xxiii) increased legal and advisor costs related to the Chapter 11 Cases and other litigation and the inherent risks involved in a bankruptcy process.

These factors are not necessarily all the important factors that could affect us. Other unpredictable or unknown factors could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. You are

cautioned not to place undue reliance on forward-looking statements, which are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by law.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Foresight Energy LP Exhibit
EX-10.1 2 eh2000444_ex1001.htm EXHIBIT 10.1 EXHIBIT 10.1 EXECUTION VERSION THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER OR ACCEPTANCE WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE.  ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE.  NOTHING CONTAINED IN THIS RESTRUCTURING SUPPORT AGREEMENT SHALL BE AN ADMISSION OF FACT OR LIABILITY OR,…
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About FORESIGHT ENERGY LP (NYSE:FELP)

Foresight Energy LP is engaged in the mining and marketing of coal from reserves and operations located in the Illinois Basin. The Company controls over three billion tons of coal in the state of Illinois. Its reserves consist principally of over three contiguous blocks of high heat content (high Btu) thermal coal, which are used for longwall operations. Thermal coal is used by power plants and industrial steam boilers to produce electricity or process steam. The Company operates over four underground mining complexes in the Illinois Basin, including Williamson, which is located in southern Illinois near the town of Marion; Sugar Camp, which is located in southern Illinois approximately 10 miles north of Williamson; Hillsboro, which is located in central Illinois near the town of Hillsboro, and Macoupin, which is located in central Illinois near the town of Carlinville. Williamson, Sugar Camp and Hillsboro are longwall operations, and Macoupin is a continuous miner operation.