Debt

6 Months Ended

Jun. 30, 2011

Debt

Debt

5.  Debt

	June 30, 2011		December 31, 2010
	(In thousands)
Commercial paper	$	—	$	56,904
7.00% senior notes due June 15, 2019 at par	1,000,000		—
7.25% senior notes due June 15, 2021 at par	1,000,000		—
Indebtedness to banks under credit facilities	360,000		—
9.125% senior notes ($200.0 million face value) due April 1, 2018	250,000		—
4.00% convertible senior notes ($16.5 million face value) due April 1, 2017	42,902		—
9.00% convertible senior notes ($18 thousand face value) due August 1, 2012	44		—
6.75% senior notes ($450.0 million face value) due July 1, 2013	451,294		451,618
8.75% senior notes ($600.0 million face value) due August 1, 2016	588,029		587,126
7.25% senior notes due October 1, 2020 at par	500,000		500,000
Other	10,264		14,093
	4,202,533		1,609,741
Less current maturities of debt and short-term borrowings	428,610		70,997
Long-term debt	$	3,773,923	$	1,538,744

The current maturities of debt include contractual maturities, as well as amounts borrowed that are supported by credit facilities that have a term of less than one year and amounts borrowed under credit facilities with terms longer than one year that the Company does not intend to refinance on a long-term basis, based on cash projections and management's plans. In addition, the current maturities at June 30, 2011 include the ICG debt that the Company redeemed in the third quarter.  See further discussion in "ICG Debt" below.

2019 and 2021 Senior Notes

On June 14, 2011, the Company entered into an indenture in conjunction with the issuance of the 7.00% senior notes due 2019 ("2019 Notes") and the 7.25% senior notes due 2021 ("2021 Notes") as discussed in Note 3, "Business Combinations." Interest is payable on the 2019 Notes and 2021 Notes on June 15 and December 15 of each year, commencing December 15, 2011.

At any time prior to June 15, 2014, the Company may redeem up to 35% of the aggregate principal amount of each of the 2019 Notes and 2021 Notes, plus accrued and unpaid interest, with the net proceeds from certain equity offerings. The Company may redeem the 2019 Notes prior to June 15, 2015 and the 2021 Notes prior to June 15, 2016 at the respective make-whole prices set forth in the indenture. On or after June 15, 2015, the Company may redeem the 2019 Notes for cash at redemption prices, reflected as a percentage of the principal amount, of: 103.5% from June 15, 2015 through June 14, 2016; 101.75% from June 15, 2016 through June 14, 2017; and 100% beginning on June 15, 2017.  On or after June 15, 2016, the Company may redeem the 2021 Notes for cash at redemption prices, reflected as a percentage of the principal amount, of: 103.625% from June 15, 2016 through June 14, 2017; 102.417% from June 15, 2017 through June 14, 2018; 101.208% from June 15, 2018 through June 14, 2019 and 100% beginning on June 15, 2019. In each case, accrued and unpaid interest at the redemption date is due upon redemption. Upon a change in control, the Company is required to make a tender offer for both series of notes at a price of 101% of the principal amount.

The 2019 Notes and 2021 Notes are guaranteed by substantially all of the Company's subsidiaries, including the newly acquired subsidiaries of ICG and excluding Arch Western, its subsidiaries and Arch Receivable Company, LLC. The Company incurred financing fees of $44.2 million related to the issuance of these notes.

The Company and the guarantor subsidiaries entered into a registration rights agreement (the "Registration Rights Agreement") in connection with the 2019 Notes and 2021 Notes. Pursuant to the Registration Rights Agreement, the Company and the guarantor subsidiaries agreed to file a registration statement with the Securities and Exchange Commission to exchange a like aggregate principal amount of senior notes identical in all material respects to the 2019 Notes and 2021 Notes. Pursuant to the Registration Rights Agreement, the Company must make reasonable best efforts to cause the registration statement to become effective by June 13, 2012. Should those events not occur within the specified time frame, the interest rate shall be increased by one-quarter of one percent per annum for the first 90 days following such period. Such interest rate will increase by an additional one-quarter of one percent per annum thereafter up to a maximum aggregate increase of one percent per annum. Once any of the required events occur, the interest rate will revert to the rate specified in the indenture.

ICG Debt

Upon the closing of the ICG acquisition, the Company gave a 30-day redemption notice to the Trustee of ICG's 9.125% senior notes and legally discharged our obligation under the 9.125% senior notes by depositing the funds to redeem the debt with the Trustee. The $260.7 million balance deposited is reflected in restricted cash on the accompanying condensed consolidated balance sheet at June 30, 2011.  On July 14, 2011, all of the outstanding 9.125% senior notes were redeemed at an aggregate price of $251.4 million, including the required make-whole premium, plus accrued interest of $5.2 million.

At the acquisition date, ICG's 4.00% convertible senior notes with a fair value of $298.5 million and 9.00% convertible senior notes with a fair value of $1.7 million ("convertible notes") became convertible into cash, pursuant to the amended indentures governing the convertible notes, at a calculated conversion rate of $2,614.6848 for each $1,000 in principal amount surrendered for conversion for the 4.00% convertible notes and $2,392.73414 for the 9.00% convertible notes.  As of July 31, 2011, the aggregate conversion value of the remaining convertible notes outstanding was $4.5 million.

Other ICG debt, with a fair value of approximately $54.0 million at the acquisition date, consisted mainly of individually insignificant equipment notes and insurance notes payable. The remaining balance of other ICG debt was $5.2 million at June 30, 2011.

The Company recognized a net loss of approximately $0.3 million on the early extinguishment of ICG's debt, including the conversions of the 4.00% and 9.00% convertible notes described above.

Credit Facilities and Commercial Paper

On June 14, 2011, the Company amended and restated its secured credit facility to allow for up to $2.0 billion in borrowings.   Borrowings under this credit facility bear interest at a floating rate based on LIBOR determined by reference to the Company's leverage ratio, as calculated in accordance with the credit agreement.  The credit facility has a five-year term that expires on June 14, 2016 and is secured by substantially all of the Company's assets as well as its ownership interests in substantially all of its subsidiaries, excluding its ownership interests in Arch Western and its subsidiaries. Commitment fees of 0.50% per annum are payable on the average unused daily balance of the revolving credit facility. The Company paid and deferred $20.7 million in financing fees related to the amendment of this agreement.  Financial covenant requirements may restrict the amount of unused capacity available to the Company for borrowings and letters of credit.

On June 14, 2011, the Company terminated its commercial paper placement program and the supporting credit facility.

Availability

As of June 30, 2011 the Company had $360.0 million of borrowings outstanding under the amended revolving credit facility.  The revolving credit facility contains customary financial covenants that limit the Company's total debt based on defined earnings measurements.   As of June 30, 2011, the Company had availability of approximately $1.1 billion under all lines of credit, as limited by these covenants.   The Company also had outstanding letters of credit of $76.2 million as of June 30, 2011.