Patriot Coal Corp. has revised its reorganization plan, as expected, ahead of a key bankruptcy hearing next week.
The new plan, filed Saturday in U.S. Bankruptcy Court in St. Louis, incorporates agreements that the Creve Coeur-based coal producer reached with the unsecured creditors committee as well as with the United Mine Workers of America.
Assuming a judge approves the company’s amended disclosure statement on schedule, a confirmation hearing for approval of the plan will take place Dec. 17, clearing the way for the company’s emergence from federal bankruptcy protection.
Funding for Patriot’s plan comes in part from $250 million in two rights offerings in which Knighthead Capital Management LLC provides a backstop by agreeing to purchase securities not taken by other creditors.
The offerings for second-lien senior notes and warrants are being extended to holders of senior notes, convertible notes and general unsecured creditors who qualify as so-called accredited investors.
To participate, creditors must file papers showing their eligibility by Nov. 27 and must subscribe for the offering by Dec. 10.
Financing of $150 million more comes from Patriot’s former parent, St. Louis-based Peabody Energy Corp., and also from Creve Coeur-based Arch Coal Inc. In addition, the Peabody settlement will provide $310 million over four years for the trust providing health benefits for retirees.
The new labor contract will save Patriot $130 million over four years, according to the disclosure statement.
Patriot said it’s in discussions with financial institutions to provide loan facilities when it emerges from bankruptcy. The backstop agreement will come to court for approval at the hearing to sanction the disclosure statement.
Holders of senior notes are projected to recover as much as 13.4 percent. For senior noteholders who don’t participate in the offering, the company’s best guess about their recovery is 2.2 percent.
Holders of convertible notes are looking at a maximum 1.93 percent recovery, or 2.12 percent if they elect treatment in a so-called convenience class.
For general unsecured creditors, their recoveries will range from a maximum of 1.93 percent to 5.8 percent, depending on which Patriot subsidiary is liable on the debt. General creditors who take treatment in the convenience class are projected to recover 0.44 percent to 1.32 percent.
In the offering, senior noteholders will have the right to buy 55.4 percent of both the warrants and $250 million in 15 percent second-lien notes for $138.5 million.
Unsecured creditors can purchase as much as 4.6 percent of the new notes and warrants for $11.55 million.
Patriot filed a bare-bones reorganization plan in September and was able to flesh out details this month following the cascade of settlements.
The company, one of the largest coal producers in the U.S., filed for Chapter 11 reorganization in July 2012, listing assets of $3.57 billion and debt of $3.07 billion as of May 2012.Bloomberg News contributed to this report.