By Jim Suhr
The Associated Press
ST. LOUIS -- A federal bankruptcy court has approved Patriot Coal's reorganization plan, clearing the way for it to emerge from 17 months of bankruptcy, the St. Louis-based company said Tuesday as it finished wrapping up its exit financing.
Bennett Hatfield, the president and CEO of Patriot Coal Corp., said the company will emerge from bankruptcy on Wednesday and that the court's approval of the plan marks the final step of its restructuring.
"We look forward to a new beginning as a well-capitalized company providing a competitive product to the electric utility and steel industries," Hatfield said.
As part of its push to regain its financial footing since filing for Chapter 11 bankruptcy in July of last year, Patriot Coal Corp. lined up $586 million in financing from Barclays and Deutsche Bank, having already obtained a $250 million infusion through a rights offering backstopped by Knighthead Capital Management LLC.
Key to Patriot's strive to exit bankruptcy was its October settlement with former corporate parent Peabody Energy Corp. of months of legal tangling over retiree health benefits. Under that deal, Peabody, which spun off Patriot in 2007, will spend $310 million over four years to fund the benefits and provide about $140 million in letters of credit to Patriot.
Peabody's payments will be funneled into a voluntary employee benefit association fund from which benefits to the retirees would be disbursed. Patriot also will contribute $75 million to the fund, plus future payments from royalty and profit-sharing commitments.
The deal also requires the United Mine Workers of America to give up most of its recently granted stake in Patriot.
U.S. Bankruptcy Judge Kathy Surratt-States ruled in May that Peabody wasn't obligated to continue health care benefits for some 3,100 retirees, but an 8th U.S. Court of Appeals bankruptcy panel reversed her ruling in August.
Patriot sued Peabody earlier this year, seeking to ensure that Peabody didn't try to use Patriot's bankruptcy to avoid having to pay the debated health care obligations.