Peabody Energy Corp. said Friday it would seek court approval to repay a $500 million term loan ahead of schedule because it has enough cash to operate in bankruptcy thanks to a rise in coal prices.
Peabody obtained an $800 million debtor-in-possession financing from both secured and unsecured creditors when it joined other large U.S. coal producers in bankruptcy in April, hit by a drop in coal prices.
The financing included a $500 million term loan, which the St. Louis-based company is planning to repay, along with a $200 million bonding accommodation facility for cleanup costs and a letter of credit worth $100 million.
Since April there has been a significant increase in the price of both the sea-borne thermal and metallurgical coal sold by Peabody, one of the world’s leading coal producers.
If Peabody repays the term loan before mid-January, its bankruptcy estate will save more than $12 million in interest payments per quarter, the company said in a filing with the U.S. Bankruptcy Court in St. Louis. The court must approve the request.
Read more: St. Louis Post-Dispatch