Long-term Debt

The Company’s total indebtedness as of September 30, 2017 and December 31, 2016 is set forth in the table below. As of December 31, 2016, substantially all of the Company’s long-term debt, with the exception of capital lease obligations, was recorded in “Liabilities subject to compromise” in the consolidated balance sheets. Refer to Note 3. “Emergence from the Chapter 11 Cases and Fresh Start Reporting” for additional information.



	Successor			Predecessor
	September 30, 2017			December 31, 2016
	(Dollars in millions)
6.00% Senior Secured Notes due March 2022	$	500.0		$	—
6.375% Senior Secured Notes due March 2025	500.0			—
Senior Secured Term Loan due 2022	645.0			—
2013 Revolver	—			1,558.1
2013 Term Loan Facility due September 2020	—			1,162.3
6.00% Senior Notes due November 2018	—			1,518.8
6.50% Senior Notes due September 2020	—			650.0
6.25% Senior Notes due November 2021	—			1,339.6
10.00% Senior Secured Second Lien Notes due March 2022	—			979.4
7.875% Senior Notes due November 2026	—			247.8
Convertible Junior Subordinated Debentures due December 2066	—			386.1
Capital lease and other obligations	84.0			20.1
Less: Debt issuance costs	(69.9		)	(70.8		)
	1,659.1			7,791.4
Less: Current portion of long-term debt	47.1			20.2
Less: Liabilities subject to compromise	—			7,771.2
Long-term debt	$	1,612.0		$	—

As more fully described in Note 3. “Emergence from the Chapter 11 Cases and Fresh Start Reporting”, on the Effective Date, all of the debt instruments associated with the Predecessor indebtedness included in the above table, with the exception of “Capital lease and other obligations”, were canceled and the debt obligations discharged. In accordance with the Plan, the Company was concurrently recapitalized with new debt and equity instruments, including the 6.000% Senior Notes due March 2022, the 6.375% Senior Notes due March 2025, and the Senior Secured Term Loan due 2022, included with the Successor obligations in the above table.

In connection with the Chapter 11 Cases, the Company was required to pay monthly adequate protection payments to certain first lien creditors in accordance with the rates defined in its existing prepetition credit facility which included the 2013 Revolver and the 2013 Term Loan Facility due September 2020. The adequate protection payments were recorded as “Interest expense” in the consolidated statement of operations, which totaled $29.8 million during the Predecessor period January 1, 2017 through April 1, 2017.

For the remaining non-first lien Predecessor indebtedness included in the table above, with the exception of capital lease and other obligations, the Company did not record interest expense subsequent to the filing of the Bankruptcy Petitions. The amount of contractual interest for such obligations which was automatically stayed in accordance with Section 502(b)(2) of the Bankruptcy Code was $92.9 million for the period January 1, 2017 through the Effective Date.

6.00% and 6.375% Senior Secured Notes (collectively, the Successor Notes)

The Successor Notes were issued at par value. The Company paid aggregate debt issuance costs of $49.5 million related to the offering, which will be amortized over the respective terms of the Successor Notes.

Interest payments on the Successor Notes are scheduled to occur each year on March 31st and September 30th until maturity. During the Successor three months ended September 30, 2017 and the Successor period April 2, 2017 through September 30, 2017, the Company recorded interest expense of $15.5 million and $30.6 million related to the Successor Notes, respectively.

The Company may redeem the 6.00% Senior Secured Notes due March 2022, in whole or in part, beginning in 2019 at 103.0% of par, in 2020 at 101.5% of par, and in 2021 and thereafter at par. The 6.375% Senior Secured Notes due March 2025 may be redeemed, in whole or in part, beginning in 2020 at 104.8% of par, in 2021 at 103.2% of par, in 2022 at 101.6% of par, and in 2023 and thereafter at par.

The indenture underlying the Successor Notes (Indenture) contains customary conditions of default and imposes certain restrictions on the Company’s activities, including its ability to incur liens, incur debt, make investments, engage in fundamental changes such as mergers and dissolutions, dispose of assets, enter into transactions with affiliates, and make certain restricted payments, such as cash dividends and share repurchases.

The Successor Notes rank senior in right of payment to any subordinated indebtedness and equally in right of payment with any senior indebtedness to the extent of the collateral securing that indebtedness. The Successor Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by substantially all of the Company’s material domestic subsidiaries and secured by first priority liens over (1) substantially all of the assets of the Company and the guarantors, except for certain excluded assets, (2) 100% of the capital stock of each domestic restricted subsidiary of the Company, (3) 100% of the non-voting capital stock of each first tier foreign subsidiary of the Company or a foreign subsidiary holding company and no more than 65% of the voting capital stock of each first tier foreign subsidiary of the Company or a foreign subsidiary holding company, (4) a legal charge of 65% of the voting capital stock and 100% of the non-voting capital stock of Peabody Investments (Gibraltar) Limited and (5) all intercompany debt owed to the Company or any guarantor, in each case, subject to certain exceptions. The obligations under the Successor Notes are secured on a pari passu basis by the same collateral securing the Successor Credit Agreement, subject to certain exceptions.

Successor Credit Agreement

Following the amendment described below, the Successor Credit Agreement provides for a $650.0 million first lien senior secured term loan (the Senior Secured Term Loan), which bears interest at LIBOR plus 3.50% per annum with a 1.00% LIBOR floor. During the Successor three months ended September 30, 2017 and the Successor period April 2, 2017 through September 30, 2017, the Company recorded interest expense of $13.8 million and $26.9 million related to the Senior Secured Term Loan, respectively.

Proceeds from the Senior Secured Term Loan were received net of an original issue discount and deferred financing costs of $37.3 million that will be amortized over its five-year term. The loan principal is payable in quarterly installments of $1.6 million plus accrued interest through December 2021 with the remaining balance due in March 2022. The loan principal is voluntarily prepayable at 101% of the principal amount repaid if voluntarily prepaid prior to March 18, 2018 (subject to certain exceptions, including prepayments made with internally generated cash) and is voluntarily prepayable at any time thereafter without premium or penalty. The Senior Secured Term Loan may require mandatory principal prepayments of 75% of Excess Cash Flow (as defined in the Successor Credit Agreement) for any fiscal year (commencing with the fiscal year ended December 31, 2018). The mandatory principal prepayment requirement changes to (i) 50% of Excess Cash Flow if the Company’s Total Leverage Ratio (as defined in the Successor Credit Agreement and calculated as of December 31) is less than or equal to 2.00:1.00 and greater than 1.50:1.00, (ii) 25% of Excess Cash Flow if the Company’s Total Leverage Ratio is less than or equal to 1.50:1.00 and greater than 1.00:1.00, or (iii) zero if the Company’s Total Leverage Ratio is less than or equal to 1.00:1.00. If required, mandatory prepayments resulting from Excess Cash Flows are payable within 100 days after the end of each fiscal year. In certain circumstances, the Senior Secured Term Loan also requires that Excess Proceeds (as defined in the Successor Credit Agreement) of $10.0 million or greater from sales of Company assets be applied against the loan principal, unless such proceeds are reinvested within one year.

Under the Successor Credit Agreement, the Company’s annual capital expenditures are limited to $220.0 million, $220.0 million, $250.0 million, $250.0 million, and $300.0 million from 2017 through 2021, respectively, subject to certain adjustments. The agreement contains customary conditions of default and imposes certain restrictions on the Company’s activities, including its ability to incur liens, incur debt, make investments, engage in fundamental changes such as mergers and dissolutions, dispose of assets, enter into transactions with affiliates, and make certain restricted payments, such as cash dividends and share repurchases.

Obligations under the Successor Credit Agreement are secured on a pari passu basis by the same collateral securing the Successor Notes.

The Company voluntarily prepaid $300.0 million of the original $950.0 loan principal amount on the Senior Secured Term Loan in $150.0 million installments on July 31, 2017 and September 11, 2017. On September 18, 2017, the Company entered into an amendment to the Successor Credit Agreement (the Amendment) which lowered the interest rate from LIBOR plus 4.50% per annum with a 1.00% LIBOR floor to LIBOR plus 3.50% with a 1.00% LIBOR floor. The Amendment permits the Company to add an incremental revolving credit facility in addition to the Company’s ability to add one or more incremental term loan facilities under the Successor Credit Agreement. The incremental revolving credit facility and/or incremental term loan facilities, which remain unutilized, can be in an aggregate principal amount of up to $300.0 million plus additional amounts so long as the Company is below Total Leverage Ratio requirements as set forth in the Successor Credit Agreement. The Amendment also made available an additional restricted payment basket that permits additional repurchases, dividends or other distributions with respect to the Company’s Common and Preferred Stock in an aggregate amount up to $450.0 million so long as the Company’s Fixed Charge Coverage Ratio (as defined in the Successor Credit Agreement) would not exceed 2.00:1.00 on a pro forma basis.

The voluntary prepayments of $300.0 million made prior to the Amendment were accounted for as a partial debt extinguishment and accordingly, a pro rata portion of debt issuance costs and original issue discount of $11.0 million was charged to loss on early debt extinguishment in the accompanying condensed consolidated statements of operations during the Successor three months ended September 30, 2017. The Amendment was accounted for partially as a debt modification and partially as an extinguishment, the latter of which relating to certain lenders no longer participating in the Senior Secured Term Loan syndicate subsequent to the Amendment. As a result, the Company charged an additional pro rata portion of debt issuance costs and original issue discount of $1.9 million to “Loss on early debt extinguishment” in the accompanying condensed consolidated statements of operations during the Successor three months ended September 30, 2017 and the Successor period of April 2 through September 30, 2017. The Company also recorded $6.1 million of deferred financing costs paid to the remaining lenders and expensed $2.0 million of other fees associated with the Amendment to “Interest expense” in the accompanying condensed consolidated statements of operations during the Successor three months ended September 30, 2017 and the Successor period of April 2 through September 30, 2017.

Restricted Payments Under the Successor Notes and Successor Credit Agreement

In addition to the $450.0 million restricted payment basket provided for under the Amendment, the Indenture and the Successor Credit Agreement allow for $50.0 million of otherwise restricted payments. Additive to this general limit are certain “builder basket” provisions that may increase the amount of allowable restricted payments, as calculated periodically based upon the Company’s operating performance. Beginning on January 1, 2018, the payment of dividends and purchases of the Company’s Common Stock are permitted under additional provisions in the Indenture and the Successor Credit Agreement in an aggregate amount in any calendar year not to exceed $25.0 million, so long as the Company’s Total Leverage Ratio would not exceed 1.25:1.00 on a pro forma basis. During the three months ended September 30, 2017, the Company made repurchases of its Common Stock, as described in Note 16. “Other Events”.

Capital Lease Obligations

The Company leases equipment and facilities under various noncancelable lease agreements and historically, the majority of the Company's leases have been accounted for as operating leases. Certain lease agreements were subject to the restrictive covenants of the 2013 Credit Facility which was canceled upon emergence from the Chapter 11 Cases and included cross-acceleration provisions, under which the lessor could require certain remedies including, but not limited to, immediate recovery of the present value of any remaining lease payments. During the Chapter 11 Cases, the Debtors amended and assumed certain leases and made lump sum payments to terminate certain other leases. In relation to the Company's non-Debtor subsidiaries, the Company successfully negotiated standstill agreements during the Chapter 11 Cases and successfully amended the leases, with those amendments becoming effective upon emergence from the Chapter 11 Cases. Certain of these amendments resulted in new lease agreements which are being accounted for as capital leases with an initial aggregate obligation of approximately $79.9 million.