Item 5. Other Information
Item 5. Other Information.
On November 6, 2020, the Company, certain of its subsidiaries, and a majority of the Company’s surety providers (the Participating Sureties) entered into a transaction support agreement (together with all exhibits and schedules attached thereto, the TSA) to define their commitments to implementing a transaction to resolve approximately $800 million in additional collateral demands made by the Participating Sureties against the Company since July 2020. A Participating Surety that recently filed lawsuits in the United States District Court for the Eastern District of Missouri and in the Supreme Court of New South Wales, Australia against the Company has also agreed to dismiss those lawsuits. Among other things, the TSA, including the term sheet attached thereto, contemplates:
• a standstill period (the Standstill Period) until the earlier of (i) December 31, 2025 or (ii) the maturity date of the Credit Agreement (subject to certain events of default as described in the TSA) during which the Participating Sureties will not, subject to certain limited exceptions outlined in the TSA, demand additional collateral; draw on letters of credit posted for the benefit of the Participating Sureties; seek remedies for breaches of indemnity agreements that are not an event of default; or cancel, or attempt to cancel, any existing surety bond;
• Peabody’s provision of $75 million of additional collateral to the Participating Sureties, a minimum of $40 million of which will be in the form of letters of credit, as soon as reasonably practicable following execution of the TSA (but in no event greater than 30 calendar days);
• Peabody’s provision of $25 million of additional collateral to the Participating Sureties each year following Closing (as defined below), payable in equal quarterly installments;
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• Peabody’s provision of further additional collateral (i) if the Company generates free cash flow in excess of $100 million in any twelve-month period or (ii) upon cumulative asset sales greater than $10 million per transaction, each in case, following Closing;
• Peabody’s provision of approximately $200 million of second liens on certain of the Company’s equipment for the benefit of the Participating Sureties upon Closing;
• Peabody’s agreement to forego any future dividends or share repurchases until the conclusion of the Standstill Period, unless otherwise agreed between Peabody and Sureties; and
• the Participating Sureties’ provision of replacement bonds for commitments currently held by non-participating sureties.
The agreements set forth in the TSA are conditioned upon each of the Participating Sureties (i) canceling no bonds and drawing on no collateral relating to existing surety bonds on or after the date of the TSA and (ii) withdrawing any outstanding claims or demands for collateral that have been made by any Participating Surety prior to the date of the TSA, and (iii) dismissing without prejudice any litigation that has been filed against Peabody (or any of its affiliates) as of the date of the TSA. In addition, Peabody has agreed to keep current all reclamation obligations in accord with applicable law, seek eligible bond releases in the ordinary course of business, and notify the Participating Sureties of any currently unabated Notice of Violation or Compliance Order relating to failure to meet contemporaneous reclamation standards, and any and all Notice of Violation or Compliance Order relating to failure to meet contemporaneous reclamation standards from any regulatory authority.
The TSA contemplates that the closing date (the Closing) will be a date concurrent with the closing of the Company’s separately negotiated debt restructuring transactions (the Proposed Transactions). The TSA and the Standstill Period will terminate if (1) Peabody files for insolvency, receivership, or bankruptcy (collectively Insolvency Proceeding) or has an involuntary Insolvency Proceeding filed against it that is not dismissed within 30 days; or (2) the Proposed Transactions are not completed on or before December 31, 2020 (which may be extended, including without limitation for purposes of increasing participation in the Proposed Transactions, to January 29, 2021).
The foregoing summary of the TSA does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the TSA, a copy of which is attached as Exhibit 10.5 hereto and incorporated herein by reference.
Item 6. Exhibits.
See Exhibit Index at page 73 of this report.
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EXHIBIT INDEX
The exhibits below are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
Exhibit No. Description of Exhibit
10.1 Management Services Agreement, dated as of August 4, 2020, by and between Peabody Investments Corp. and each of the Client Companies listed on the signature page thereto ( Incorporated by reference to Exhibit 10.3 of the Registrant ’ s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020)
10.2 Management Services Agreement, dated as August 4, 2020, by and between Peabody Energy Australia Pty Ltd and each of the Client Companies listed on the signature page thereto (Incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020)
10.3 Termination Agreement, dated as of October 5, 2020, between Peabody Energy Corporation and Arch Resources, Inc. ( I ncorporated by reference to Exhibit 10.1 of the Registrant ’ s Current Report on Form 8-K filed October 6, 202 0 )
10.4*† Separation and Release Agreement, dated as of September 28, 2020, between Peabody Energy Corporation and Charles Meintjes
10.5† Transaction Support Agreement, dated as of November 6 , 2020, between Peabody Energy Corporation, certain subsidiaries of Peabody Energy Corporation and the Participating Sureties
31.1† Certification of periodic financial report by the Registrant’s Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2† Certification of periodic financial report by the Registrant’s Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1† Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Registrant’s Chief Executive Officer
32.2† Certification of periodic financial report pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by the Registrant’s Chief Financial Officer
95† Mine Safety Disclosure required by Item 104 of Regulation S-K
101.INS Inline XBRL Instance Document - the instance document does not appear in the interactive data file because XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101
* These exhibits constitute all management contracts, compensatory plans and arrangements required to be filed as an exhibit to this form pursuant to Item 15(a)(3) and 15(b) of this report.
† Filed herewith.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PEABODY ENERGY CORPORATION
Date: November 9, 2020 By: /s/ MARK A. SPURBECK
Mark A. Spurbeck
Executive Vice President and Chief Financial Officer
(On behalf of the registrant and as Principal Financial Officer)
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