Daily News: May 13, 2019

Cloud Peak Files for Chapter 11, Ankura to Agent DIP Financing


Cloud Peak Energy, the only pure-play Powder River Basin coal company, filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

Cloud Peak Energy intends to continue a marketing process for all of its assets and expects its mines to continue normal operations throughout the process, safely and efficiently meeting all customer commitments.

Colin Marshall, Cloud Peak president and CEO, commented, “Over the past several months, Cloud Peak Energy has thoroughly evaluated strategic alternatives to address the challenging market conditions in our industry. We believe, at this time, that a sale process in Chapter 11 will provide the best opportunity to maximize value for Cloud Peak Energy.”

In conjunction with the filing, and subject to court approval, Cloud Peak Energy has received a commitment for approximately $35 million in debtor-in-possession financing from certain of the company’s prepetition secured noteholders. According to court filings on Prime Clerk, Ankura Trust will serve as administrative and collateral agents on the facilities.

Cloud Peak expects $10 million of the total DIP financing will be available on an interim basis. The DIP financing, combined with the company’s cash on hand and funds generated from ongoing operations, are expected to provide sufficient liquidity for the company to continue operating in the ordinary course during the sale process.

Cloud Peak also entered into an amended and restated sale and plan support agreement with holders of approximately 62% in dollar amount of the company’s secured notes due 2021 and more than 50% in dollar amount of the company’s unsecured notes due 2024. The support agreement reflects, among other things, the support from two of the company’s key creditor constituencies for the company’s sale process, as well as the consent of the holders of the 2021 notes to the company’s use of cash collateral and priming liens to allow for the DIP financing.

Cloud Peak Energy has filed a number of customary motions with the court seeking authorization to support its operations while this process is ongoing, including authority to continue payment of employee wages, salaries and benefits without interruption.

Vinson & Elkins is serving as legal advisor, Centerview Partners is serving as investment banker and FTI Consulting is serving as financial advisor to Cloud Peak Energy. Davis Polk & Wardwell is serving as legal advisor and Houlihan Lokey as financial advisor to the ad hoc group of holders of 2021 notes and the DIP lenders.