GILLETTE (WNE) — A recently completed effort to reduce short-term debt and new agreements with its reclamation surety bond holders has eased some financial pressure and given Peabody Energy Corp. officials a more optimistic outlook for 2021, despite a disastrous 2020 that saw the company lose about $1.9 billion.
A perfect storm of an already weak market for domestic thermal coal and low natural gas prices was significantly impacted by the COVID-19 pandemic on energy consumption.
Add in a federal court upholding a Federal Trade Commission rejection of a joint venture between Peabody and Arch Natural Resources Inc. and demands for increased collateral by its surety bond holders, much of the fourth quarter 2020 involved speculation about how close Peabody was to its second bankruptcy in five years.
The year ended on a shaky note with a net revenue loss of nearly $128 million in the fourth quarter. But 2021 is looking better with the company having secured an agreement with its surety bond holders and an overhaul of its debt structure that pushes out much of its obligations beyond 2022, according to Peabody President and CEO Glenn Kellow.
The debt refinancing was completed last week and includes about $1.5 billion that pushes out the sunset of all but $60.3 million maturing prior to the end of 2024.
“Our new capital structure provides a foundation for future value creation and the time needed to continue to pursue cash flow improvements across our operations,” said Chief Financial Officer Mark Spurbeck in a company statement announcing its year-end financials.
He also said Peabody has put up another $75 million in collateral to its surety holders and has agreed to provide another $25 million annually through 2024.