Risk Factors.
−Removed: We operate in a rapidly changing environment that involves a number of risks.
−Removed: In addition to the risks discussed below, for information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in Part I, Item 1A.
−Removed: “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020 and in Part II, Item 1A.
−Removed: “Risk Factors” in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 filed with the SEC on May 6, 2020 and August 7, 2020, respectively.
−Removed: The risk factors described in such Forms 10-Q included additional risk factors relating to the ongoing COVID-19 pandemic and updates to risk factors relating to restrictions and covenants under our debt agreements, which is addressed further below.
+Added: The Company operates in a rapidly changing environment that involves a number of risks.
+Added: For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in Part I, Item 1A.
+Added: “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 23, 2021.
In addition to the other information set forth in this Quarterly Report, including the information presented in Item 2.
−Removed: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” you should carefully consider the risk factors disclosed in the aforementioned filings, which could materially affect the Company’s results of operations, financial condition and liquidity.
−Removed: The combined risks associated with our recent financial results and market conditions, additional collateral demands, and potential Credit Agreement noncompliance raise substantial doubt about whether we will meet our obligations as they become due and our ability to continue as a going concern.
−Removed: We experienced negative cash flows from operations during the nine months ended September 30, 2020.
−Removed: Results from continuing operations, net of income taxes and Adjusted EBITDA for the nine months ended September 30, 2020 declined by $1,841.3 million and $487.7 million, respectively, compared to the corresponding prior year period.
−Removed: Our available liquidity declined from $1,275.8 million as of December 31, 2019 to $860.1 million as of September 30, 2020.
−Removed: Available liquidity as of October 31, 2020, September 30, 2020 and December 31, 2019 was comprised of the following:
−Removed: October 31, 2020 September 30, 2020 December 31, 2019
−Removed: (Dollars in millions)
−Removed: Cash and cash equivalents $ 770.7 $ 814.6 $ 732.2
−Removed: Revolving credit facility availability 11.5 5.1 498.6
−Removed: Accounts receivable securitization program availability 45.8 40.4 45.0
−Removed: Total liquidity $ 828.0 $ 860.1 $ 1,275.8
−Removed: During the nine months ended September 30, 2020, the combined availability under our revolving credit facility and accounts receivable securitization program decreased as a result of $360.0 million of borrowings, $70.0 million of which was subsequently repaid, an additional $134.2 million of letters of credit issuances, and a $73.9 million reduction in available receivable balances under the accounts receivable securitization program.
−Removed: We are party to various guarantees and financial instruments to provide support for our reclamation bonding requirements, lease obligations, insurance policies and various other performance guarantees.
−Removed: At September 30, 2020, such instruments inclu ded $1,628.7 million face amount of surety bonds and $334.8 million of outstanding letters of credit.
−Removed: Subsequent to the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 202 0 with the SEC on August 7, 2020, our counterparties have made various additional demands for collateral amounting to approximately $800 million.
−Removed: As further described below, we have reached an agreement with the majority of our surety bond providers to resolve these demands and limit future collateral requests.
−Removed: While we were compliant with the restrictions and covenants under our debt agreements at September 30, 2020, noncompliance with the first lien leverage ratio covenant under our Credit Agreement is probable as of December 31, 2020, if we do not successfully take mitigating actions.
−Removed: Absent waivers from the lenders under the Credit Agreement or other successful mitigating actions, noncompliance with the ratio covenant would constitute a default under the Credit Agreement, and the revolving lenders could elect to accelerate the maturity of the related indebtedness, or could potentially choose to exercise other rights and remedies under the agreement.
−Removed: Further, our senior secured notes, accounts receivable securitization program and certain lease agreements contain cross-default or termination provisions that would be triggered by an Event of Default as defined under the Credit Agreement, which could result in similar accelerations of those obligations.
−Removed: Accordingly, we have classified all such debt obligations and relevant lease liabilities as current in the accompanying condensed consolidated balance sheet as of September 30, 2020.
−Removed: The combined risks associated with our recent financial results, market conditions, additional collateral demands and potential Credit Agreement noncompliance raise substantial doubt about whether we will meet our obligations as they become due within one year from the date of issuance of these unaudited condensed consolidated financial statements and our ability to continue as a going concern.
−Removed: The accompanying unaudited condensed consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about our ability to continue as a going concern.
−Removed: We are seeking to address the issues identified above by taking certain mitigating actions.
−Removed: As part of this process, we have entered into a transaction support agreement (TSA) in November 2020 with the providers of 99% of our surety bond portfolio (Participating Sureties) to define the parties’ commitments to implementing a transaction resolving approximately $800 million in additional collateral demands made by the Participating Sureties.
−Removed: Among other things, the TSA includes the following terms and conditions:
−Removed: • Under the terms of the TSA, we will post $75.0 million of collateral, a minimum of $40.0 million of which will be in the form of letters of credit, and provide second liens on $200.0 million of certain mining equipment for the benefit of the Participating Sureties..
−Removed: • In addition, we will post an additional $25.0 million of collateral per year through 2025 for the benefit of the Participating Sureties.
−Removed: The collateral postings will also further increase to the extent we generate more than $100.0 million of free cash flow (as defined in the TSA) in any twelve-month period or have asset sales in excess of $10.0 million.
−Removed: • The Participating Sureties have agreed to a standstill through the earlier of December 2025 or the maturity date of the Credit Agreement (as amended or refinanced).
−Removed: During which time, the Participating Sureties agree not to demand any additional collateral, draw on letters of credit posted for the benefit of themselves, or cancel, or attempt to cancel, any existing surety bond.
−Removed: In addition, we have been engaged in discussions with our revolving credit lenders and the 2022 Noteholders with the primary objectives of covenant relief and the extension of maturity dates, while maintaining financial flexibility.
−Removed: The TSA described above is contingent upon an agreement between Peabody, our revolving credit lenders, and the 2022 Noteholders accomplishing those objectives by December 31, 2020, which can be extended at our discretion to January 29, 2021 for purposes of increasing participation.
−Removed: Further, we are working to improve our liquidity and financial position through other means such as the sale of nonstrategic surplus land, coal reserves, and other assets, and driving cost improvements across our operations.
−Removed: However, there can be no assurance that we will be able to obtain a waiver of noncompliance or otherwise amend the Credit Agreement to address covenant issues, reach agreement on the comprehensive approach to address our combined liquidity risks described above, or improve our overall liquidity and financial position through other means.
−Removed: As a result, our ability to timely meet our obligations when due or satisfy additional collateral demands could be adversely affected.
−Removed: If we are not able to timely, successfully, or efficiently implement the strategies that we are pursuing to address those risks and improve our liquidity and financial position, or otherwise meet our liquidity needs, we may need to voluntarily pursue an in-court restructuring.
+Added: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” you should carefully consider the risk factors disclosed in the aforementioned filing, which could materially affect the Company’s results of operations, financial condition and liquidity.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.