Arch Coal has reached an agreement with a majority of the lenders under its $1.9 billion first lien financing facility to significantly restructure the company’s debt load.

Arch has entered into a restructuring support agreement with the members of an ad hoc group of lenders that hold more than 50% of the company’s first lien debt. Under the terms of the agreement, the lenders have agreed to support a restructuring transaction that will eliminate more than $4.5 billion in debt from Arch’s balance sheet and position the company for long-term success.

In order to facilitate this financial restructuring, Arch and substantially all of its wholly-owned domestic subsidiaries have filed voluntary petitions for reorganization under bhapter 11 of the bankruptcy code in the U.S. Bankruptcy Court for the Eastern District of Missouri. The company and the ad hoc group have agreed to the principal terms of a chapter 11 plan of reorganization, which will be subject to approval by the bankruptcy court.

Arch had more than $600 million in cash and short-term investments as of January 11, 2016, and expects to receive $275 million in debtor-in-possession (DIP) financing from members of the ad hoc group of lenders led by Wilmington Trust, as successor administrative agent to Bank of America that resigned as agent in July 2015. The applicable margin is LIBOR plus 900 bps (LIBOR floor of 1.0%)

In addition, Arch expects that its securitization financing providers will continue the company’s $200 million trade accounts receivable securitization facility, subject to customary conditions, which supports Arch’s letters of credit program. According to bankruptcy court documents, PNC serves as administrator under the securitization facility.

Upon approval by the bankruptcy court and satisfaction of customary conditions, these financings, as well as the company’s existing liquidity and cash generated from ongoing operations, will be used to support the business during the restructuring process.