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Subsequent Events
6 Months Ended
Jun. 30, 2015
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events

Customer Contract Termination

On September 20, 2012, Patriot Coal Corporation ("Patriot") filed a motion with the U.S. Bankruptcy Court for the Southern District of New York to reject a master coal sales agreement entered into on December 31, 2005 between the Company and Magnum Coal Company ("Magnum") which was acquired by Patriot in July 2008. The master coal sales agreement was established in order to meet obligations under a coal sales agreement with a customer who did not consent to the assignment of their contract to Magnum. On December 18, 2012, the court accepted Patriot's motion to reject the master coal sales agreement. As a result of the court's decision, the Company accrued $58.3 million, which represented the discounted cash flows of the remaining monthly buyout amounts under the underlying coal sales agreement. Subsequent to June 30, 2015, the Company has entered into a definite agreement to terminate the contract after payment of $12.5 million of which $3.5 million will be paid upon execution of the agreement with the remaining $9.0 million to be paid on October 1, 2015. The termination of the contract will generate an approximate $25.0 million pre-tax gain which will be recorded in the Company's third quarter results.

Reverse Stock Split

On August 4, 2015, the Company's common stock is expected to begin trading on the New York Stock Exchange ("NYSE") on a split-adjusted basis following a one-for-ten reverse stock split originally announced on July 20, 2015. Every ten shares of issued and outstanding common stock, including treasury shares, will be exchanged into one share of the Company's common stock. As a result of the reverse stock split, the number of outstanding shares of the Company's common stock will be reduced from approximately 213 million to 21.3 million. No fractional shares will be issued in connection with the reverse stock split; instead, stockholders who otherwise would have received fractional shares will receive, in lieu of such fractional shares, an amount of cash based on the volume weighted average price of the Company's common stock for the date of the reverse stock split, which is expected to be August 3, 2015.

Debt Restructuring

On July 2, 2015, the Company launched two private debt exchange offers in an effort to de-lever the balance sheet and improve our liquidity profile.

The first offer exchanges, for each $1,000 of outstanding 7.25% Senior Notes due 2020 (the "2020 Notes"), $418.69 of new 6.25% Trust Certificates due 2021 (the "Trust Certificates") and a $60 cash payment for holders that tendered before July 17, 2015, or a $30 cash payment for holders who tendered thereafter and before expiration of the offer (July 31, 2015, unless extended by us). The Trust Certificates represent a fractional undivided interest in Arch Pass Through Trust, a Delaware statutory trust (the “Trust”) whose only assets will be (i) senior secured term loans due 2021 (the “New Term Loans”) issued as incremental debt under Arch’s existing credit agreement and (ii) senior secured revolving commitments (the “New Revolving Loans”). The New Revolving Loans will be transferred to the Trust by the assignment of existing revolving commitments. The aggregate principal amount of New Term Loans and New Revolving Loans outstanding at any time may not exceed $404 million, and will be equal to the principal amount of Trust Certificates issued in the offers described herein. In conjunction with the exchange offer, the Company has solicited consents (the "Consent Solicitation") from holders of the 2020 Notes to certain proposed amendments (the "Proposed 2020 Notes Amendments") to the indenture governing the 2020 Notes. The Proposed 2020 Notes Amendments modify certain restrictive covenants contained in such indenture to conform to the Company's other indentures, including with respect to the issuance of additional secured debts. Holders who tender their 2020 Notes are deemed to consent to the Proposed 2020 Notes Amendments, and holders may not deliver consents to the Proposed 2020 Notes Amendments without tendering their 2020 Notes in the exchange offer. The consummation of the exchange offer is conditioned upon, among other things, and the Proposed 2020 Notes Amendments require, the receipt of consents pursuant to the Consent Solicitation from the holders of a majority in aggregate principal amount of outstanding 2020 Notes not owned by the Company or any of its affiliates. The offer is only available to holders of 2020 Notes that are qualified institutional buyers pursuant to Rule 144A and qualified purchasers pursuant to Section 2(a)(51) of the Investment Company Act. Holders that are therefore not eligible have been offered new 8.0% Secured Notes due 2022 (the "New 2022 Secured Notes) (which will be secured by liens on our assets ranking junior to the liens securing our credit agreement and senior to the liens securing our existing second lien notes and the new 2023 Secured Notes) at a rate of $837.38 per $1,000 of 2020 Notes plus the same cash payment referred to above. As of July 29, 2015, holders of $414.4 million of 2020 Notes have tendered in the offer and an additional $32.7 million have tendered in the offer for non-eligible holders. Withdrawal rights for the offer have expired, and we have executed a supplemental indenture containing the Proposed Amendments, although the Proposed Amendments will not be operative until the offer is consummated.

The second offer exchanges Trust Certificates, New 2022 Secured Notes and 12.0% Senior Secured Second Lien Notes due 2023 (the "New 2023 Secured Notes") for outstanding 7.00% Senior Notes due 2019 ("Old 7.00% 2019 Notes"), 9.875% Senior Notes due 2019 ("Old 9.875% 2019 Notes") and 7.25% Senior Notes due 2021 ("Old 7.25% 2021 Notes"). Each holder of Old Notes will have to elect (subject to the acceptance priority, allocation and proration mechanics described in the Offering Memorandum referred to below) whether it wishes to receive exchange consideration in the form of Trust Certificates, New 2022 Secured Notes or New 2023 Secured Notes in exchange for each $1,000 principal amount of Old Notes validly tendered and accepted for exchange. The aggregate principal amount of New Securities received by tendering holders of a series of Old Notes per $1,000 principal amount tendered will be the same with respect to all holders of such series of Old Notes ($400 in the case of Old 7% 2019 Notes and Old 7.25% 2021 Notes and $450 in the case of Old 9.875% 2019 Notes, in each case if tendered at or prior to the Early Tender Time (currently August 4, 2015) irrespective of the form of consideration elected, even though the Trust Certificates are expected to be more valuable than the New 2022 Secured Notes, which are in turn expected to be more valuable than the New 2023 Secured Notes, as a result of the different priorities of the liens securing (or underlying ) the New Securities. The aggregate principal amount of New Securities to be issued pursuant to the Exchange Offer will be determined in accordance with the Acceptance Priority Level (as defined below), the Maximum Exchange Amount (as defined below), the tender caps referred to in the immediately succeeding sentence and certain other terms and conditions, and may also be based on when Old Notes are tendered, as described in the Offering Memorandum referred to below. The tender caps will limit the aggregate principal amount of New Securities to be issued in the Exchange Offer to: (i) in the case of the Trust Certificates, $404.0 million, minus the aggregate principal amount of Trust Certificates issued pursuant to the exchange offer referred to above, (ii) in the case of New 2022 Secured Notes, $200.0 million, minus the aggregate principal amount of New 2022 Secured Notes issued pursuant to the ineligible holders offer referred to above, and (iii) in the case of the New 2023 Secured Notes, $150.0 million. The "Maximum Exchange Amount" refers to the sum of the tender caps. The consummation of the Exchange Offer is conditioned upon, among other things, the completion of the exchange offer and consent solicitation referred to above. As of July 29, 2015, holders of $487.2 million of Old 7.00% 2019 Notes, holders of $169.2 million of Old 9.875% 2019 Notes and holders of $398.1 million of Old 7.25% 2021 Notes have tendered in the offer. Withdrawal rights for the exchange offer have expired. Based on the tenders to date, the Trust would issue $404 million of Trust Certificates and we would issue $200 million of New 2022 Secured Notes and $27.1 million of New 2023 Secured Notes and we would achieve debt reduction of $870 million and reduce annual interest expense by $67.6 million.
Completion of the offers is subject to various conditions and requires execution of certain documents by the administrative agents under the existing credit agreement.  On July 28, 2015, certain unidentified term loan lenders under the credit agreement purporting to hold more than 50% of the term loans under the credit agreement delivered a letter to the term loan administrative agent directing it to refrain from executing documentation relating to the exchange offers.  In addition, the letter includes certain other assertions regarding the exchange offers and the existence of a default under the Credit Agreement.   Arch Coal has evaluated the assertions made in the letter and believes they are without merit.  While Arch Coal believes that the assertions and directions set forth above are without merit, and intends to contest them vigorously, it cannot predict what effect the assertions and direction set forth in the letter, or any future claims, might have on the exchange offers.  In particular, if the term loan administrative agent elects to follow the direction embodied in the letter, the exchange offers would not be consummated.