Cloud Peak Energy announced that it completed a refinancing of its $500 million revolving credit facility. On February 21, 2014, Cloud Peak Energy Resources entered into a credit Agreement with PNC Bank as administrative agent, and a syndicate of lenders. The agreement provides a senior secured revolving credit facility with a capacity of up to $500 million that can be used to borrow funds or issue letters of credit.
The agreement replaces the company’s previous $500 million senior secured revolving credit agreement dated June 3, 2011. Subject to the satisfaction of certain conditions, the company may elect to increase the size of the revolving credit facility and/or request the addition of one or more new tranches of term loans in an amount up to the greater of $200 million or the company’s EBITDA for the preceding four fiscal quarters.
The agreement will mature 180 days prior to the due date of the company’s 8.25% senior notes due December 15, 2017, provided that if those senior notes are refinanced or repaid in full, the credit facility would then mature five years after the closing of the agreement. The agreement revises certain financial covenants based on EBITDA, specifically requiring the company to maintain a ratio of EBITDA to consolidated net cash interest expense equal to or greater than 2.00 to 1, and adjusting the leverage ratio covenant to a net secured leverage ratio, requiring the company to maintain a ratio of senior secured funded debt, less unrestricted cash and marketable securities (net secured debt) to EBITDA equal to or less than 3.00 to 1 through December 31, 2015, 2.75 to 1 from January 1, 2016 to December 31, 2016 and 2.50 to 1 from January 1, 2017 to maturity.
This facility and capital leases are considered senior secured funded debt under the covenant calculations whereas federal coal lease obligations, A/R securitizations and senior notes are not considered senior secured funded debt. The agreement also revises other covenants, including covenants related to the company’s ability to incur additional debt or take other corporate activities.
Loans under the agreement bear interest at LIBOR plus an applicable margin of between 2.00% and 2.75%, depending on the company’s leverage ratio.
The company’s obligations under the agreement are secured by substantially all of its assets and substantially all of the assets of certain of its subsidiaries, subject to certain permitted liens and customary exceptions for similar coal financings. Obligations under the agreement are also supported by a guarantee by the company’s domestic restricted subsidiaries and may in the future be guaranteed by Cloud Peak Energy.
Michael Barrett, EVP and CFO, commented, “We are pleased to have extended the tenure of our credit facility and relaxed certain covenants, resulting in increased available capacity under the revolver. Had the new borrowing facility been in place at year end our total available liquidity would have been approximately $843 million.”
Wyoming-headquartered Cloud Peak Energy is one of the largest U.S. coal producers and the only pure-play PRB coal company.