Debt and Financing Arrangements



	December 31,
	2014		2013
	(In thousands)
Term loan due 2018 ($1.9 billion and $1.93 billion face value, respectively)	$	1,890,846	$	1,906,975
7.00% senior notes due 2019 at par	1,000,000		1,000,000
8.00% senior secured notes due 2019 at par	350,000		350,000
9.875% senior notes ($375.0 million face value) due 2019	363,493		362,358
7.25% senior notes due 2020 at par	500,000		500,000
7.25% senior notes due 2021 at par	1,000,000		1,000,000
Other	56,031		32,162
	5,160,370		5,151,495
Less current maturities of debt	36,885		33,493
Long-term debt	$	5,123,485	$	5,118,002

Credit Facilities

Under the Company's senior secured revolving credit facility, borrowings of up to $250 million bear interest at a floating rate based on LIBOR determined by reference to the Company's leverage ratio, as calculated in accordance with the underlying amended credit agreement. The credit agreement, which also governs its term loan due 2018, was amended in 2013 to decrease the available capacity of the senior secured revolving credit facility from $350 million to the current level. The credit facility expires on June 14, 2016 and is secured by assets pledged by the Company, including equity interests in wholly‑owned subsidiaries, certain real property interests, accounts receivable and inventory of the Company. Commitment fees of 0.50% to 0.75% per annum are payable on the average unused daily balance of the revolving credit facility.

The Company is also party to an accounts receivable securitization program under which eligible trade receivables are sold, without recourse, to a multi‑seller, asset‑backed commercial paper conduit. The entity through which these receivables are sold is consolidated into the Company's financial statements. The Company may borrow and draw letters of credit against the facility, and pays facility fees, program fees and letter of credit fees (based on amounts of outstanding letters of credit). The total aggregate borrowings and letters of credit are limited by eligible accounts receivable, as defined under the terms of the credit facility agreement. The credit agreement expires on December 8, 2017, unless the Company's minimum liquidity, including liquid assets, falls below $550 million.

At December 31, 2014, the available borrowing capacity under the Company's lines of credit was approximately $215.1 million.

Term Loan

On May 16, 2012, the Company borrowed $1.4 billion under a secured term loan facility, issued at a 1% discount. The proceeds from the term loan were used to retire all outstanding borrowings under the revolving credit facility and the outstanding $450.0 million principal amount of 6.75% Senior Notes due 2013 issued by Arch Western Finance, LLC, the Company’s indirect subsidiary. On November 21, 2012, the Company borrowed an incremental $250.0 million on the term loan facility at a 1% discount at the same rate as the initial borrowing. On December 17, 2013 the credit facility amendment increased the maximum amount of term loans allowed under the facility, and the Company borrowed an incremental $300.0 million aggregate principal amount at 98% of the face amount.

The term loan contains no financial maintenance covenants, is prepayable, and is secured by the same assets as borrowings under the revolving credit facility. Quarterly principal payments of $3.5 million began in September 2012, increased to $4.125 million per quarter as a result of the incremental borrowing in November, 2012, and increased further to $4.875 million with the December 17, 2013 borrowing. A balloon payment of $1.8 billion is due in May, 2018. Interest is payable at a rate that is equal to a base of the greater of a LIBOR-based rate and 1.25%, plus 500 basis points.

2019 9.875% Notes

On November 21, 2012, the Company issued $375.0 million aggregate principal amount of 9.875% senior unsecured notes due 2019 (the “2019 9.875% Notes”) at an issue price of 95.934% of the face amount. Interest is payable on the 2019 9.875% Notes annually on June 15 and December 15. The Company may redeem some or all of the notes at prices that are reflected as a percentage of the principal amount, as follows: 104.938% commencing December 15, 2016; 102.469% commencing December 15, 2017; and 100% on or after December 15, 2018.

The unsecured senior notes are guaranteed by substantially all of the Company's subsidiaries, except for Arch Receivable Company, LLC, which is the conduit for the accounts receivable securitization program, and the Company's subsidiaries outside the U.S.

2019 Secured Notes

On December 17, 2013, the Company issued $350.0 million aggregate principal amount of 8.00% senior secured second lien notes due 2019 (the “2019 Secured Notes”) at par. The 2019 Secured Notes are secured by the same assets that secure indebtedness under the senior secured credit facility, but on a second priority basis, subject to certain exceptions and permitted liens. Interest is payable on the 2019 Secured Notes on January 15 and July 15 of each year. The Company may redeem some or all of the notes at prices that are reflected as a percentage of the principal amount, as follows: 104.0% commencing January 15, 2016, 102.0% commencing January 15, 2017, and 100% on or after January 15, 2018.

2020 Notes

The Company has outstanding $500.0 million in aggregate principal amount of 7.25% senior unsecured notes due in 2020 (“2020 Notes”) at par. Interest is payable on the 2020 Notes on April 1 and October 1 of each year. The Company may redeem some or all of the 2020 Notes during the respective 12 month periods at prices that are reflected as a percentage of the principal amount, as follows: 103.625% commencing October 1, 2015; 102.417% commencing October 1, 2016; 101.208% commencing October 1, 2017; and 100% on or after October 1, 2018.

2019 7% Notes and 2021 Notes

The Company has outstanding $1.0 billion of 7.00% unsecured senior notes due 2019 (“2019 7% Notes”) and $1.0 billion of 7.25% unsecured senior notes due 2021 (“2021 Notes”). Interest is payable on the 2019 7% Notes and 2021 Notes on June 15 and December 15 of each year. The Company may redeem some or all of the 2019 7% Notes at prices that are reflected as a percentage of the principal amount, as follows: 103.5% commencing June 15, 2015; 101.75% commencing June 15, 2016; and 100% on or after June 15, 2017. The Company may redeem some or all of the 2021 Notes at prices that are reflected as a percentage of the principal amount, as follows: 103.625% commencing June 15, 2016; 102.417% commencing June 15, 2017; 101.208% commencing June 15, 2018 and 100% on or after June 15, 2019. In each case, accrued and unpaid interest at the redemption date is due upon redemption.

Other Debt Retirements

On December 17, 2013, the Company retired the outstanding $600 million in aggregate principal amount of 8.75% senior unsecured notes due 2016 (“2016 Notes”) for $628.7 million with the proceeds from the incremental term loan and the 2019 Secured Notes.

On May 16, 2012, Arch Western Finance accepted for purchase an aggregate of approximately $304.0 million principal amount of its 6.75% Senior Notes due 2013 for $308.0 million. On May 30, 2012, the remaining notes with an outstanding principal amount of $146.0 million were redeemed at par value.

Debt Maturities

The expected maturities of debt are as follows:



Year
2015	$	36,915
2016	29,875
2017	30,091
2018	1,858,145
2019	1,730,670
Thereafter	1,500,960
	$	5,186,656

Debt Covenants

Financial covenant requirements may restrict the amount of unused capacity available to the Company for borrowings and letters of credit under credit facilities. The credit facility amendment on December 17, 2013 amended financial maintenance covenants to include only a minimum liquidity test until June, 2015, at which time a maximum secured leverage ratio test takes effect. The amendment also limits dividends to one cent per share per fiscal year.

Terms of the Company's credit facilities and leases also contain covenants that limit the ability of the Company to, among other things, acquire, dispose, merge or consolidate assets; incur additional debt; pay dividends and make distributions or repurchase stock; make investments; create liens; issue and sell capital stock of subsidiaries; enter into restrictions affecting the ability of restricted subsidiaries to make distributions, loans or advances to the Company; engage in transactions with affiliates and enter into sale and leaseback transactions. Failure by the Company to comply with such covenants could result in an event of default, which, if not cured or waived, could have a material adverse effect on the Company.

Financing Costs

The Company paid financing costs of $4.5 million, $20.5 million and $50.6 million in conjunction with its financing activities during the years ended December 31, 2014, 2013 and 2012, respectively.

During the years ended December 31, 2013 and 2012, the Company wrote off deferred financing costs of $5.4 million and $1.1 million, respectively, and $6.9 million of unamortized discount and $0.8 million of unamortized issue premium, respectively, related to the redemption of senior notes. In addition, the Company wrote off $1.9 million and $23.4 million of deferred financing costs relating to the reduction in capacity of the senior secured revolving credit facility during the years ended December 31, 2013 and 2012 respectively. The write-off of deferred financing fees, along with other transaction fees associated with these transactions, is reflected in the line "Net loss resulting from early retirement and refinancing of debt " in the consolidated statement of operations.