Emergence from the Chapter 11 Cases and Fresh Start Reporting (Tables)

6 Months Ended

Jun. 30, 2017

Treatment of classified claims and interests [Table Text Block]

The following summarizes the various classes of claimants' recoveries under the Plan. Undefined capitalized terms used in this section, Treatment of Classified Claims and Interests, are defined in the Plan.



First Lien Lender Claims (Classes 1A - 1D)		Paid in full in cash.

Second Lien Notes Claims (Classes 2A - 2D)		A combination of (1) $450 million of cash, first lien debt and/or new second lien notes and (2)(a) new common stock, par value $0.01 per share, of the Reorganized Peabody (Common Stock) and (b) subscription rights in the Rights Offering.

Other Secured Claims (Classes 3A - 3E)		At the election of the Debtors, (1) reinstatement, (2) payment in full in cash, (3) receipt of the applicable collateral or (4) such other treatment consistent with section 1129(b) of the Bankruptcy Code.

Other Priority Claims (Classes 4A - 4E)		Paid in full in cash.

General Unsecured Claims		Class 5A: Against Peabody Energy: a pro rata share of $5 million in cash plus an amount of additional cash (up to $2 million) not otherwise paid to holders of Convenience Claims.
		Class 5B: Against the Encumbered Guarantor Debtors: (1) Reorganized Peabody common stock and subscription rights in the Rights Offering or (2) at the election of the claim holder, cash from a pool of $75 million in cash to be paid by the Debtors and the Reorganized Debtors into a segregated account in accordance with the terms set forth in the Plan.
		Class 5C: Against the Gold Fields Debtors: units in the Gold Fields Liquidating Trust.
		Class 5D: Against Peabody Holdings (Gibraltar) Limited: no recoveries.
		Class 5E: Against the Unencumbered Debtors: cash in the amount of such holder’s allowed claim, less any amounts attributable to late fees, postpetition interest or penalties.

Convenience Claims		Class 6A: Against Peabody Energy: up to 72.5% of such claim in cash, provided that total payments to Convenience Claims may not exceed $2 million.
		Class 6B: Against the Encumbered Guarantor Debtors: up to 72.5% of such claim in cash, provided that total payments to Convenience Claims may not exceed $18 million.

United Mine Workers of America 1974 Pension Plan Claim (Classes 7A - 7E)		$75 million in cash paid over five years. See Note 5. "Discontinued Operations," for additional details.



Unsecured Subordinated Debentures Claims (Class 8A)		(1) Payment of the reasonable and documented fees and expenses of the trustee under the 2066 subordinated indenture up to $350,000; and (2) because this class voted in favor of the Plan and in connection with the settlement of certain potential intercreditor disputes as part of the global settlement embodied therein, and because the trustee under the 2066 subordinated indenture did not object to, and affirmatively supported, the Plan, holders of allowed Unsecured Subordinated Debenture Claims received from specified noteholder co-proponents their pro rata share of penny warrants exercisable for 1.0% of the fully diluted Reorganized Peabody common stock from the pool of penny warrants issued to the noteholder co-proponents under the Rights Offering and/or the terms of the Backstop Commitment Agreement (as defined below).

Section 510(b) Claims (Class 10A)		No recovery.

Peabody Energy Equity Interests (Class 11A)		No recovery, as further described under Cancellation of Prior Common Stock below.

Schedule of impacts of the implementation of the Plan and the application of fresh start reporting

The following balance sheet illustrates the impacts of the implementation of the Plan and the application of fresh start reporting, which results in the opening balance sheet of the Successor company.



As of April 1, 2017	Predecessor (a)			Effect of Plan (b)				Fresh Start Adjustments (c)				Successor
	(Dollars in millions)
ASSETS
Current assets
Cash and cash equivalents	$	1,068.1		$	(14.4	)	(d)	$	—			$	1,053.7
Restricted cash	80.7			(54.7		)	(d)	—				26.0
Successor Notes issuance proceeds - restricted cash	1,000.0			(1,000.0		)	(d)	—				—
Accounts receivable, net	312.1			—				—				312.1
Inventories	250.8			—				70.1			(k)	320.9
Assets from coal trading activities, net	0.6			—				—				0.6
Other current assets	493.9			(18.1		)	(e)	(333.0		)	(l)	142.8
Total current assets	3,206.2			(1,087.2		)		(262.9		)		1,856.1
Property, plant, equipment and mine development, net	8,653.9			—				(3,461.4		)	(m)	5,192.5
Investments and other assets	976.4			3.9			(f)	238.0			(n)	1,218.3
Total assets	$	12,836.5		$	(1,083.3	)		$	(3,486.3	)		$	8,266.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	18.2		$	9.5		(g)	$	—			$	27.7
Liabilities from coal trading activities, net	0.7			—				—				0.7
Accounts payable and accrued expenses	967.3			257.6			(h)	14.8			(o)	1,239.7
Total current liabilities	986.2			267.1				14.8				1,268.1
Long-term debt, less current portion	950.5			903.2			(g)	—				1,853.7
Deferred income taxes	179.2			—				(177.8		)	(p)	1.4
Asset retirement obligations	707.0			—				(73.9		)	(q)	633.1
Accrued postretirement benefit costs	753.9			—				(6.9		)	(r)	747.0
Other noncurrent liabilities	511.1			—				120.6			(s)	631.7
Total liabilities not subject to compromise	4,087.9			1,170.3				(123.2		)		5,135.0
Liabilities subject to compromise	8,416.7			(8,416.7		)	(i)	—				—
Total liabilities	12,504.6			(7,246.4		)		(123.2		)		5,135.0
Stockholders’ equity
Common Stock (Predecessor)	0.2			(0.2		)	(j)	—				—
Common Stock (Successor)	—			0.7			(b)	—				0.7
Series A Preferred Stock (Successor)	—			1,305.4			(b)	—				1,305.4
Additional paid-in capital (Predecessor)	2,423.9			(2,423.9		)	(j)	—				—
Additional paid-in capital (Successor)	—			1,774.9			(b)	—				1,774.9
Treasury stock, at cost	(371.9		)	371.9			(j)	—				—
Accumulated deficit	(1,284.1		)	5,134.3			(j)	(3,850.2		)	(t)	—
Accumulated other comprehensive loss	(448.5		)	—				448.5			(t)	—
Peabody Energy Corporation stockholders’ equity	319.6			6,163.1				(3,401.7		)		3,081.0
Noncontrolling interests	12.3			—				38.6			(u)	50.9
Total stockholders’ equity	331.9			6,163.1				(3,363.1		)		3,131.9
Total liabilities and stockholders’ equity	$	12,836.5		$	(1,083.3	)		$	(3,486.3	)		$	8,266.9


(a)	Represents the Predecessor consolidated balance sheet at April 1, 2017.


(b)	Represents amounts recorded for the implementation of the Plan on the Effective Date. This includes the settlement of liabilities subject to compromise through a combination of cash payments, the issuance of new common stock and warrants and the issuance of new debt. The following is the calculation of the total pre-tax gain on the settlement of the liabilities subject to compromise.



	(Dollars in millions)
Liabilities subject to compromise	$	8,416.7
Less amounts issued to settle claims:
Successor Common Stock (at par)	(0.7		)
Successor Series A Convertible Preferred Stock	(1,305.4		)
Successor Additional paid-in capital	(1,774.9		)
Issuance of Successor Notes	(1,000.0		)
Issuance of Successor Term Loan	(950.0		)
Cash payments and accruals for claims and professional fees	(336.4		)
Other:
Write-off of Predecessor debt issuance costs, see also (e) below	(18.1		)
Total pre-tax gain on plan effects, see also (j) below	$	3,031.2

At the Effective Date, 70.9 million shares of Successor Common Stock were issued and outstanding at a par value of $0.01 per share.

Successor Preferred Stock was recorded at fair value and is based upon the $750.0 million cash raised upon emergence from bankruptcy through the Private Placement Agreement, plus a premium to account for the fair value of the preferred shares’ conversion and dividend features. Each preferred share is convertible, at the holder’s election or upon the occurrence of certain triggering events, into common shares at a 35% discount relative to the initial per share purchase price of $25.00 and provides for three years of guaranteed paid-in-kind dividends, payable semiannually, at a rate of 8.5% per annum. The 46.2 million shares of Successor Common Stock issuable upon conversion of the preferred shares issued under the Plan and an additional 13.1 million shares of Successor Common Stock attributable to such preferred shares’ guaranteed paid-in-kind dividend feature constitute approximately 42% ownership of the Plan Equity Value (as defined in the Plan) of $3,105.0 million in the reorganized Company, and thus have a fair value of $1,305.4 million.

Successor Additional paid-in capital was recorded at the Plan Equity Value less the amounts recorded for par value of the Successor Common Stock, the fair value of the Successor Preferred Stock, and certain fees incurred associated with the Registration Rights Agreement.


(c)	Represents the fresh start reporting adjustments required to record the assets and liabilities of the Company at fair value.


(d)	The following table reflects the sources and uses of cash and restricted cash at emergence:



	(Dollars in millions)
Sources:
Private placement and rights offering	$	1,500.0
Net proceeds from Senior Secured Term Loan	912.7
Escrowed interest from Successor Notes offering	8.0
Net impact on collateral requirements	11.6
Uses:
Payments to secured lenders	(3,489.2		)
Professional fees	(8.3		)
Securitization facility deferred financing costs	(3.9		)
Total cash outflow at emergence	$	(1,069.1	)


(e)	Primarily represents the write off of deferred financing costs associated with the cancellation and discharge of Predecessor revolving debt obligations.


(f)	Represents the payment of deferred financing costs associated with the Receivables Purchase Agreement.

(g)

Represents a new $950 million Senior Secured Term Loan, net of an original issue discount and deferred financing costs of $37.3 million, as contemplated by the Plan. Under the Plan, the Company also issued $1.0 billion of Successor Notes, net of $49.5 million of deferred financing costs. The Successor Notes and the related proceeds held in escrow were included on Company's unaudited condensed consolidated balance sheet at March 31, 2017. The new debt instruments issued in accordance with the Plan are further described in Note 13. "Long-term Debt."


(h)	Represents an accrual to account for amounts paid subsequent to the Effective Date for professional fees and certain unsecured claims and settlements set forth in the Plan.

(i)

Liabilities subject to compromise include secured and unsecured liabilities incurred prior to the Petition Date. These liabilities represent the amounts expected to be allowed on known or potential claims to be resolved through the Chapter 11 Cases and remain subject to future adjustments based on negotiated settlements with claimants, actions of the Bankruptcy Court, rejection of executory contracts, proofs of claims or other events. Additionally, liabilities subject to compromise also include certain items that were assumed under the Plan, and as such, were subsequently reclassified to liabilities not subject to compromise. Generally, actions to enforce or otherwise effect payment of prepetition liabilities are subject to the injunction provisions set forth in the Plan, as discussed in Note 19. "Commitments and Contingencies". Liabilities subject to compromise consisted of the following immediately prior to emergence and at December 31, 2016:



	Predecessor
	April 1, 2017		December 31, 2016
	(Dollars in millions)
Debt ⁽¹⁾	$	8,077.4	$	8,080.3
Interest payable	172.6		172.6
Environmental liabilities	61.9		61.9
Trade payables	55.2		58.4
Postretirement benefit obligations ⁽²⁾	23.0		34.6
Other accrued liabilities	26.6		32.4
Liabilities subject to compromise	$	8,416.7	$	8,440.2


⁽¹⁾	Includes $7,768.3 million and $7,771.2 million of first lien, second lien and unsecured debt at April 1, 2017 and December 31, 2016, respectively, and $257.3 million of derivative contract terminations, and $51.8 million of liabilities secured by prepetition letters of credit at April 1, 2017 and December 31, 2016.


⁽²⁾	Includes liabilities for unfunded non-qualified pension plans, all the participants of which are former employees.


(j)	Reflects the impacts of the reorganization adjustments:



	(Dollars in millions)
Total pre-tax gain on plan effects, see also (b) above	$	3,031.2
Cancellation of Predecessor Common Stock	0.2
Cancellation of Predecessor Additional paid-in capital	2,423.9
Cancellation of Predecessor Treasury stock	(371.9		)
Successor debt issuance costs and other items, see also (f) and (g) above	50.9
Net impact on accumulated deficit	$	5,134.3


(k)	Represents adjustment to increase the book value of coal inventories to their estimated fair value, less costs to sell the inventories.

(l)

Represents adjustments comprising $228.5 million related to assets classified as held-for-sale at March 31, 2017 which were reclassified as held-for-use and considered in connection with the valuations described in (m) below, $89.5 million to write off certain existing short-term mine development costs, and $15.0 million of various prepaid assets deemed to have no future utility subsequent to the Effective Date.


(m)	Represents a $3,461.4 million reduction in property, plant and equipment to estimated fair value as discussed below:



	Predecessor			Fresh Start Adjustments			Successor
	(Dollars in millions)
Land and coal interests	$	10,297.7		$	(6,511.8	)	$	3,785.9
Buildings and improvements	1,479.3			(1,013.2		)	466.1
Machinery and equipment	2,143.8			(1,203.3		)	940.5
Less: Accumulated depreciation, depletion and amortization	(5,266.9		)	5,266.9			—
Net impact on accumulated deficit	$	8,653.9		$	(3,461.4	)	$	5,192.5

The fair value of land and coal interests, excluding the asset related to the Company's asset retirement obligations described below, was established at $3,504.7 million utilizing a discounted cash flow model and the market approach. The market approach was used to provide a starting value of the coal mineral reserves without consideration for economic obsolescence. The DCF model was based on assumptions market participants would use in the pricing of these assets as well as projections of revenues and expenditures that would be incurred to mine or maintain these coal reserves through the life of mine. The basis of the DCF analysis was the Company’s prepared projections which included a variety of estimates and assumptions, such as pricing and demand for coal. The Company’s pricing was based on its view of the market taking into account third-party forward pricing curves adjusted for the quality of products sold by the Company. The fair value of land and coal interests also includes $281.2 million corresponding to the asset retirement obligation discussed in item (q) below.

The fair value of buildings and improvements and machinery and equipment were set at $466.1 million and $940.5 million, respectively, utilizing both market and cost approaches. The market approach was used to estimate the value of assets where detailed information for the asset was available and an active market was identified with a sufficient number of sales of comparable property that could be independently verified through reliable sources. The cost approach was utilized where there were limitations in the secondary equipment market to derive values from. The first step in the cost approach is the estimation of the cost required to replace the asset via construction or purchasing a new asset with similar utility adjusting for depreciation due to physical deterioration, functional obsolescence due to technology changes and economic obsolescence due to external factors such as regulatory changes. Useful lives were assigned to all assets based on remaining future economic benefit of each asset.

(n)

Primarily to recognize fair value of $314.9 million inherent in certain U.S. coal supply agreements as a result of favorable differences between contract terms and estimated market terms for the same coal products, partially offset by a reduction in the fair value of certain equity method investments. The intangible asset related to coal supply agreements will be amortized on a per ton shipped basis through 2025, predominately over the next three years. See also Note 9. "Sales Contracts."

(o)

Represents $32.6 million to account for the short-term portion of the value of certain contract-based intangibles primarily consisting of unutilized capacity of certain port and rail take-or-pay contracts, partially offset by $15.7 million related to liabilities classified as held-for-sale at March 31, 2017 which were reclassified as held-for-use and considered in connection with the valuations described in (m) above, and various other fair value adjustments. The intangible liabilities related to port and rail take-or-pay contracts will be amortized ratably over the terms of each contact, which vary in duration through 2043.


(p)	Represents the tax impact of fresh start reporting. See also Note 12. "Income Taxes."


(q)	Represents the fair value adjustment related to the Company’s asset retirement obligations which was calculated using discounted cash flow models based on current mine plans. The credit-adjusted, risk-free interest rates utilized to estimate the Company's asset retirement obligations were 9.36% for its U.S. reclamation obligations and 4.36% for its Australia reclamation obligations.

(r)

Represents the remeasurement of liabilities associated with the Company's postretirement benefits obligations as of the Effective Date as the reorganization of the Company pursuant to the Plan represented a remeasurement event under ASC 715 "Compensation - Retirement Benefits." The relevant discount rate was adjusted to 4.1% from 4.15% used in the Company's most recent year-end remeasurement process.

(s)

Represents $83.6 million to account for the long-term portion of the value of contract-based intangibles related to unutilized capacity of port and rail take-or-pay contracts as described in (o) above and $58.7 million to account for the fair value inherent in certain U.S. coal supply agreements as a result of unfavorable differences between contract terms and estimated market terms for the same coal products as described in (n) above, partially offset by a remeasurement reduction of $9.2 million of the Company's pension liabilities in accordance with ASC 715 as described in (r) above, as the relevant discount rate was adjusted to 4.1% from 4.15% used in the Company's most recent year-end remeasurement process, and certain other valuation adjustments.


(t)	Represents the elimination of remaining equity balances in accordance with fresh start reporting requirements.


(u)	Represents adjustment to increase the book value of noncontrolling interests to fair value based on an estimate of the rights of the noncontrolling interests.

Pre-tax gain on the settlement of the liabilities subject to compromise

The following is the calculation of the total pre-tax gain on the settlement of the liabilities subject to compromise.



	(Dollars in millions)
Liabilities subject to compromise	$	8,416.7
Less amounts issued to settle claims:
Successor Common Stock (at par)	(0.7		)
Successor Series A Convertible Preferred Stock	(1,305.4		)
Successor Additional paid-in capital	(1,774.9		)
Issuance of Successor Notes	(1,000.0		)
Issuance of Successor Term Loan	(950.0		)
Cash payments and accruals for claims and professional fees	(336.4		)
Other:
Write-off of Predecessor debt issuance costs, see also (e) below	(18.1		)
Total pre-tax gain on plan effects, see also (j) below	$	3,031.2

Liabilities subject to compromise consisted of the following immediately prior to emergence and at December 31, 2016:



	Predecessor
	April 1, 2017		December 31, 2016
	(Dollars in millions)
Debt ⁽¹⁾	$	8,077.4	$	8,080.3
Interest payable	172.6		172.6
Environmental liabilities	61.9		61.9
Trade payables	55.2		58.4
Postretirement benefit obligations ⁽²⁾	23.0		34.6
Other accrued liabilities	26.6		32.4
Liabilities subject to compromise	$	8,416.7	$	8,440.2


⁽¹⁾	Includes $7,768.3 million and $7,771.2 million of first lien, second lien and unsecured debt at April 1, 2017 and December 31, 2016, respectively, and $257.3 million of derivative contract terminations, and $51.8 million of liabilities secured by prepetition letters of credit at April 1, 2017 and December 31, 2016.


⁽²⁾	Includes liabilities for unfunded non-qualified pension plans, all the participants of which are former employees.

Schedule of sources and uses of cash and restricted cash at emergence

The following table reflects the sources and uses of cash and restricted cash at emergence:



	(Dollars in millions)
Sources:
Private placement and rights offering	$	1,500.0
Net proceeds from Senior Secured Term Loan	912.7
Escrowed interest from Successor Notes offering	8.0
Net impact on collateral requirements	11.6
Uses:
Payments to secured lenders	(3,489.2		)
Professional fees	(8.3		)
Securitization facility deferred financing costs	(3.9		)
Total cash outflow at emergence	$	(1,069.1	)

Impact of the reorganization adjustments

Reflects the impacts of the reorganization adjustments:



	(Dollars in millions)
Total pre-tax gain on plan effects, see also (b) above	$	3,031.2
Cancellation of Predecessor Common Stock	0.2
Cancellation of Predecessor Additional paid-in capital	2,423.9
Cancellation of Predecessor Treasury stock	(371.9		)
Successor debt issuance costs and other items, see also (f) and (g) above	50.9
Net impact on accumulated deficit	$	5,134.3

Adjustments to property, plant and equipment

Represents a $3,461.4 million reduction in property, plant and equipment to estimated fair value as discussed below:



	Predecessor			Fresh Start Adjustments			Successor
	(Dollars in millions)
Land and coal interests	$	10,297.7		$	(6,511.8	)	$	3,785.9
Buildings and improvements	1,479.3			(1,013.2		)	466.1
Machinery and equipment	2,143.8			(1,203.3		)	940.5
Less: Accumulated depreciation, depletion and amortization	(5,266.9		)	5,266.9			—
Net impact on accumulated deficit	$	8,653.9		$	(3,461.4	)	$	5,192.5

Schedule of reorganization items, net

The Company's reorganization items for the period January 1 through April 1, 2017, and the three and six months ended June 30, 2016 consisted of the following:



	Predecessor
	April 1, 2017			Three Months Ended June 30, 2016			January 1 through April 1, 2017			Six Months Ended June 30, 2016
	(Dollars in millions)
Gain on settlement of claims (per above)	$	(3,031.2	)	$	—		$	(3,031.2	)	$	—
Fresh start adjustments, net (per above)	3,363.1			—			3,363.1			—
Fresh start income tax adjustments, net	253.9			—			253.9			—
Loss on termination of derivative contracts	—			75.2			—			75.2
Professional fees	—			21.6			42.5			21.6
Accounts payable settlement gains	—			(0.2		)	(0.7		)	(0.2		)
Interest income	—			(0.2		)	(0.4		)	(0.2		)
Other	—			(1.0		)	—			(1.0		)
Reorganization items, net	$	585.8		$	95.4		$	627.2		$	95.4

Cash paid for "Reorganization items, net"	$	14.4		$	—		$	45.8		$	—