Arch Coal’s Fourth Amended Joint Plan of Reorganization became effective, and the Company emerged from Chapter 11 protection. The U.S. Bankruptcy Court confirmed the Plan on September 15, 2016. Arch Coal announced that with its emergence the Company will trade on the NYSE under the ticker symbol ARCH.
John W. Eaves, chief executive officer of Arch Coal, states, “We are extremely pleased with what we have accomplished during our highly expeditious restructuring process, and are eager to move forward with our compelling plan for value creation. I am confident we have all the pieces in place for long-term success – an extraordinary workforce, cost-competitive assets, a high-quality reserve base, a clean balance sheet and an excellent management team.”
According to BankruptcyData, the Plan incorporates and implements the terms of a global settlement agreement the Company reached with certain of its senior secured lenders and the Official Committee of Unsecured Creditors and eliminates more than $4.7 billion in debt from Arch Coal’s balance sheet, significantly enhancing the company’s financial flexibility.
Under the Plan, the following will occur:
1. Other Secured Claims will be paid in cash in full for a 100% rate of recovery.
2. First Lien Credit Facility Secured Claims will be entitled to receive its pro rata share of a total cash payment equal to the greater of $144,796,527.78 less the amount of the Adequate Protection Payments and $30,000,000; $326.5 million in principal amount of New First Lien Debt; and 94% of the New Common Stock for a 41.1% – 58.2% rate of recovery.
3. General Unsecured Claims will be entitled to receive its pro rata share of the GUC Cash Distribution for a rate of recovery of 1.9%.
4. Interests in Arch Coal receive no distribution and will be cancelled.
BankruptcyData further notes that the Plan’s Valuation Analysis estimates that the going concern enterprise value of the Reorganized Arch Coal is between $650 million and $950 million. Reorganized Arch Coal will have $326.5 million of debt at emergence, and the estimated value of the Reorganized Debtors’ equity is between $324 million and $666 million. The Liquidation Analysis for Reorganized Arch Coal estimates the Net Liquidation Proceeds to be between $387.0 million and $683.0 million. The recovery rate to the First Lien Credit Facility Secured Claims is estimated to be between 4% and 21%. The recovery rates to General Unsecured Claims and Unsecured Funded Debt Claims is estimated to be zero.
The Company emerges with more than $300 million of cash on its balance sheet and a debt level of just $363 million, consisting of a new term loan and capital leases. Arch Coal’s total debt is 7% of what it was prior to restructuring. This coal producer and seller filed for Chapter 11 protection on January 11, 2016, listing $8.4 billion in pre-petition assets.
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