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Emergence from the Chapter 11 Cases and Fresh Start Reporting | 6 Months Ended
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Jun. 30, 2017
Reorganizations [Abstract] |
Emergence from the Chapter 11 Cases and Fresh Start Reporting | Emergence from the Chapter 11 Cases and Fresh Start Reporting The following is a summary of certain provisions of the Plan, as confirmed by the Bankruptcy Court pursuant to the Confirmation Order, and is not intended to be a complete description of the Plan, which is included in its entirety as Exhibit 2.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on March 20, 2017. The consummation of the Plan resulted in the following capital structure on the Effective Date. •Successor Notes - $1,000.0 million first lien senior secured notes. •Successor Credit Facility - A first lien credit facility of $950.0 million.
• | Series A Preferred Stock - $750.0 million for 30.0 million shares of Series A Convertible Preferred Stock.
• | Common Stock and Warrants - $750.0 million for common stock and warrants issued in connection with a Rights Offering (as defined below), resulting in, together with other issuances of common stock, the issuance of 70.9 million shares of a single class of common stock and warrants to purchase 6.2 million shares of common stock.
The new debt and equity instruments comprising the Successor Company's capital structure are further described below. Treatment of Classified Claims and Interests 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.
Cancellation of Prior Common Stock In accordance with the Plan and as previously disclosed, each share of the Company’s common stock outstanding prior to the Effective Date, including all options and warrants to purchase such stock, were extinguished, canceled and discharged, and each such share, option or warrant has no further force or effect after the Effective Date. Furthermore, all of the Company’s equity award agreements under prior incentive plans, and the awards granted pursuant thereto, were extinguished, canceled and discharged and have no further force or effect after the Effective Date. Issuance of Equity Securities Section 1145 Securities On the Effective Date, in connection with the Company’s emergence from the Chapter 11 Cases and in reliance on the exemption from registration requirements of the Securities Act of 1933 (the Securities Act) provided by Section 1145 of the Bankruptcy Code, the Company issued:
• | 11.6 million shares of Common Stock to holders of Allowed Claims (as defined in the Plan) in Classes 2A, 2B, 2C, 2D and 5B on account of such claims as provided in the Plan; and
• | 51.2 million shares of Common Stock and 2.9 million Warrants (the 1145 Warrants) pursuant to the completed Rights Offering to certain holders of the Company’s prepetition indebtedness for total consideration of $704.4 million.
Any shares of Common Stock issued pursuant to the exercise of such 1145 Warrants were similarly issued pursuant to the exemption from registration provided by Section 1145 of the Bankruptcy Code. Section 4(a)(2) Securities In addition, on the Effective Date, in connection with the Company’s emergence from the Chapter 11 Cases and in reliance on the exemption from registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act, the Company issued:
• | 30.0 million shares of Series A Convertible Preferred Stock (the Preferred Stock) to parties to the Private Placement Agreement, dated as of December 22, 2016 (as amended, the Private Placement Agreement), among the Company and the other parties thereto, for total consideration of $750.0 million;
• | 3.3 million shares of Common Stock and 0.2 million Warrants (the Private Warrants, and together with the 1145 Warrants, the Warrants) to parties to the Backstop Commitment Agreement, dated as of December 22, 2016 (as amended, the Backstop Commitment Agreement), among the Company and the other parties thereto, on account of their commitments under that agreement, for total consideration of $45.6 million; and
• | 4.8 million shares of Common Stock and 3.1 million additional Private Warrants to specified parties to the Private Placement Agreement and Backstop Commitment Agreement on account of commitment premiums contemplated by those agreements.
Any shares of Common Stock issued pursuant to the conversion of the Preferred Stock or the exercise of such Private Warrants have been or will be issued pursuant to the exemption from registration provided by Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act. The securities issued in reliance on Section 4(a)(2) of the Securities Act were subject to restrictions on transfer; however, substantially all such shares were registered with the SEC on a resale Form S-1 effective July 14, 2017. Current Equity Structure As of June 30, 2017, the Company would have approximately 137.3 million shares of Common Stock issued, assuming full conversion of the Preferred Stock (including make-whole shares issuable upon conversion of the Preferred Stock) and full exercise of all Warrants. This amount excludes approximately 3.6 million shares of Common Stock which underly unvested equity awards granted under the 2017 Incentive Plan (as defined below). Other Forms of Equity Authorized under the Company’s Certificate of Incorporation As noted on the accompanying condensed consolidated balance sheets, the Company’s Fourth Amended and Restated Certificate of Incorporation authorizes the issuances of additional series of preferred stock, as well as series common stock. Other than the Series A Convertible Preferred Stock, no other series of preferred stock is outstanding as of June 30, 2017. Additionally, as of June 30, 2017, no series common stock is outstanding. A copy of the Company’s Fourth Amended and Restated Certificate of Incorporation is included as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. Preferred Stock The Preferred Stock accrues dividends at a rate of 8.5% per year, payable in-kind semi-annually on April 30 and October 31 of each year as additional shares of Series A Convertible Preferred Stock, and may be converted into a number of shares of our common stock as described below. The Preferred Stock will also participate on an as-converted basis (giving effect to any accrued and unpaid dividends) in any dividend, distribution or payments to holders of Common Stock. Upon the Company's liquidation, dissolution or wind up, whether voluntarily or involuntarily, the holders of Preferred Stock are granted a liquidation preference of $25.00 per share of Preferred Stock, plus any accrued but unpaid dividends through the date of liquidation. The Preferred Stock may also participate on an as-converted basis in any payments upon liquidation payable to the holders of Common Stock. The Preferred Stock shall be convertible into Common Stock at any time, at the option of the holders at an initial conversion price of $16.25, representing a discount of 35% to the equity value assigned to the Common Stock by the Plan (subject to customary any-dilution adjustments, the Conversion Price). If at any time following the Effective Date, less than 7,500,000 shares of Preferred Stock remain outstanding, then the Company shall have the right, but not the obligation, to redeem all (but not less than all) of the remaining shares of Preferred Stock, following thirty days’ notice, and on no more than 60 days’ notice, at a redemption price equal to $25 per share of Preferred Stock, payable in cash or shares of Common Stock at the Company's election, subject to certain adjustments; provided that the Company shall not redeem any shares of Preferred Stock for cash during any time that any obligations under the Successor Credit Agreement (as defined below) remain outstanding. At any time following the Effective Date, if holders of at least 66 2/3% of the Preferred Stock elect to convert, then all remaining outstanding Preferred Stock will automatically convert at the same time and on the same terms. In addition, beginning on the Effective Date, each outstanding share of Preferred Stock shall automatically convert into a number of shares of Common Stock at the Conversion Price (such conversion, the Mandatory Conversion) if the volume weighted average price of the Common Stock exceeds $32.50 (the Conversion Threshold) for at least 45 trading days in a 60 consecutive trading day period, including each of the last 20 days in such 60 consecutive trading day period (such period, the Mandatory Conversion Period). Finally, the Preferred Stock shall automatically convert into shares of Common Stock immediately prior to the consummation of a Fundamental Change (generally defined as significant business combinations, as fully defined in the Certificate of Designation of Series A Convertible Preferred Stock included as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2017) if either (1) at consummation of the Fundamental Change, the price of the Common Stock exceeds the Conversion Threshold, or (2) the consideration payable in the Fundamental Change per share of Common Stock exceeds the Conversion Threshold and is payable in cash. Upon any optional or mandatory conversion of the Preferred Stock that occurs on or prior to the three year anniversary of its initial issuance, holders of the Preferred Stock will be deemed to have (1) received dividends through the last payment of dividends prior to the conversion, including dividends received on prior dividends, to the extent accrued and not previously paid; and (2) dividends on the shares of Preferred Stock then outstanding and any shares deemed issued pursuant to the preceding clause accruing from the last dividend date preceding the date of the conversion through, but not including, the three year anniversary of their initial issuance, and all dividends on prior dividends. In respect of an optional or mandatory conversion occurring after the three year anniversary of its initial issuance, there shall be deemed to have been issued in respect of all shares of Preferred Stock at the time outstanding (1) dividends through the date of payment of the dividend immediately preceding the date of the conversion, including dividends on such dividends, to the extent accrued and not previously paid, and (2) dividends on (a) the shares of Preferred Stock at the time outstanding and (b) any shares of Preferred Stock deemed issued pursuant to the preceding clause (1) accruing from the date of payment of the dividend immediately preceding the conversion, through, but not including, the date of conversion and all dividends on such dividends. There are no restrictions on the repurchase or redemption of the Preferred Stock while there is any arrearage in the payment of dividends. The Preferred Stock votes with the Common Stock as a single class on an as-converted basis on all matters submitted to a vote of the holders of Common Stock with the exception of certain matters, as outlined in the Certificate of Designation of Series A Convertible Preferred Stock, in which the holders of Preferred Stock are entitled to vote as a separate class with a majority vote required for approval. Such matters include any Fundamental Change requiring approval of the holders of Common Stock and authorization of cash dividends on Common Stock in excess of $100 million payable in any 12-month period. Rights Offering Pursuant to the Plan and Rights Offering, holders of Allowed Claims in Classes 2A, 2B, 2C, 2D and 5B were offered the opportunity to purchase up to 54.5 million units, each unit being comprised of (1) one share of Common Stock and (2) a fraction of a Warrant. The purchase price for the units offered in the Rights Offering was $13.75 per unit. A total of 51.2 million units were purchased in the Rights Offering. Pursuant to the Backstop Commitment Agreement, the remaining 3.3 million units that were not purchased in the Rights Offering were purchased by the parties to the Backstop Commitment Agreement at the same per-unit price. Registration Rights Agreement On the Effective Date, the Company entered into a registration rights agreement (Registration Rights Agreement) with certain parties (together with any person or entity that becomes a party to the Registration Rights Agreement, the Holders) that received shares of the Company's Common Stock and Preferred Stock in the Company on the Effective Date, as provided in the Plan. The Registration Rights Agreement provides Holders with registration rights for the Holders’ Registrable Securities (as defined in the Registration Rights Agreement). Substantially all of the Holders’ Registrable Securities were registered with the SEC on Form S-1 effective July 14, 2017. The registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in an underwritten offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. A copy of the Registration Rights Agreement is included as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. Warrant Agreement On the Effective Date, the Company entered into a warrant agreement (the Warrant Agreement) with American Stock Transfer and Trust Company, LLC. In accordance with the Plan, the Company issued 6.2 million warrants to purchase one share of Common Stock each at an exercise price of $0.01 per share to all Noteholder Co-Proponents (as defined in the Plan) and subscribers in the Rights Offering (as defined in the Plan) and related backstop commitment. All Warrants described above under the heading “Issuance of Equity Securities” were issued under the Warrant Agreement. All unexercised Warrants expired, and the rights of the holders of such Warrants to purchase Common Stock terminated on July 3, 2017, with less than 0.1% of the Warrants unexercised. A copy of the Warrant Agreement is included as Exhibit 4.1 to the Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. 6.00% and 6.375% Senior Secured Notes (collectively, the Successor Notes) On February 15, 2017, one of PEC's subsidiaries entered into an indenture with Wilmington Trust, National Association, as trustee, relating to the issuance by PEC's subsidiary of $500.0 million aggregate principal amount of 6.000% senior secured notes due 2022 (the 2022 Notes) and $500.0 million aggregate principal amount of 6.375% senior secured notes due 2025 (together with the 2022 Notes, the Successor Notes). The Successor Notes were sold on February 15, 2017 in a private transaction exempt from the registration requirements of the Securities Act. Prior to the Effective Date, PEC's subsidiary deposited the proceeds of the offering of the Successor Notes into an escrow account pending confirmation of the Plan and certain other conditions being satisfied. On the Effective Date, the proceeds from the Successor Notes were used to repay the predecessor first lien obligations. The Successor Notes are further described in Note 13. "Long-term Debt" and copies of the indenture documents underlying the Successor Notes are incorporated as Exhibits 4.2 and 4.3 to the Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. Successor Credit Agreement In connection with an exit facility commitment letter, on the Effective Date, the Company entered into a credit agreement, dated as of April 3, 2017, among the Company, as Borrower, Goldman Sachs Bank USA, as Administrative Agent, and other lenders party thereto (the Successor Credit Agreement). The Successor Credit Agreement provides for a $950 million senior secured term loan, which matures in 2022 and bears interest at a fluctuating rate of LIBOR plus 4.50% per annum with a 1.00% LIBOR floor. On the Effective Date, the proceeds from the Successor Credit Agreement were used to repay the predecessor first lien obligations. The Successor Credit Agreement is further described in Note 13. "Long-term Debt" and a copy of the Successor Credit Agreement is included as Exhibit 10.3 to the Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. Securitization Facility In connection with a receivables securitization program commitment letter, on the Effective Date, the Company entered into the Sixth Amended and Restated Receivables Purchase Agreement, as amended, dated as of April 3, 2017 (Receivables Purchase Agreement), among P&L Receivables Company, LLC (P&L Receivables), as the Seller, the Company, as the Servicer, the sub-servicers party thereto, the various purchasers and purchaser agents party thereto and PNC Bank, National Association (PNC), as administrator. The Receivables Purchase Agreement extends the receivables securitization facility previously in place and expands that facility to include certain receivables from the Company’s Australian operations. The Receivables Purchase Agreement is further described in Note 18. "Financial Instruments and Other Guarantees" and a copy of the Receivables Purchase Agreement is included as Exhibit 10.4 to the Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. Cancellation of Prepetition Obligations In accordance with the Plan, on the Effective Date all of the obligations of the Debtors with respect to the following debt instruments were canceled:
• | Indenture governing $1,000.0 million outstanding aggregate principal amount of the Company’s 10.00% Senior Secured Second Lien Notes due 2022, dated as of March 16, 2015, among the Company, U.S. Bank National Association (U.S. Bank), as trustee and collateral agent, and the guarantors named therein, as supplemented;
• | Indenture governing $650.0 million outstanding aggregate principal amount of the Company’s 6.50% Senior Notes due 2020, dated as of March 19, 2004, among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented;
• | Indenture governing $1,518.8 million outstanding aggregate principal amount of the Company’s 6.00% Senior Notes due 2018, dated as of November 15, 2011, among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented;
• | Indenture governing $1,339.6 million outstanding aggregate principal amount of the Company’s 6.25% Senior Notes due 2021, dated as of November 15, 2011, by and among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented;
• | Indenture governing $250.0 million outstanding aggregate principal amount of the Company’s 7.875% Senior Notes due 2026, dated as of March 19, 2004, among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented;
• | Subordinated Indenture governing $732.5 million outstanding aggregate principal amount of the Company’s Convertible Junior Subordinated Debentures due 2066, dated as of December 20, 2006, among the Company and U.S. Bank, as trustee, as supplemented; and
• | Amended and Restated Credit Agreement, as amended and restated as of September 24, 2013 (the 2013 Credit Facility), related to $1,170.0 million outstanding aggregate principal amount of term loans under a term loan facility (the 2013 Term Loan Facility) and $1,650.0 million under a revolving credit facility (the 2013 Revolver), which includes approximately $675 million of posted but undrawn letters of credit and approximately $947 million in outstanding borrowings, by and among the Company, Citibank, N.A., as administrative agent, swing line lender and letter of credit issuer, Citigroup Global Markets, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Securities Corp., Crédit Agricole Corporate and Investment Bank, HSBC Securities (USA) Inc., Morgan Stanley Senior Funding, Inc., PNC Capital Markets LLC and RBS Securities Inc., as joint lead arrangers and joint book managers, and the lender parties thereto, as amended by that certain Omnibus Amendment Agreement, dated as of February 5, 2015.
2017 Incentive Compensation Plan In accordance with the Plan, the Peabody Energy Corporation 2017 Incentive Plan (the 2017 Incentive Plan) became effective as of the Effective Date. The 2017 Incentive Plan is intended to, among other things, help attract and retain employees and directors upon whom, in large measure, the Company depends for sustained progress, growth and profitability. The 2017 Incentive Plan also permits awards to consultants. Unless otherwise determined by the Board, the compensation committee of the Board will administer the 2017 Incentive Plan. The 2017 Incentive Plan generally provides for the following types of awards:
• | options (including non-qualified stock options and incentive stock options);
• | stock appreciation rights;
• | restricted stock;
• | restricted stock units;
• | deferred stock;
• | performance units;
• | dividend equivalents; and
• | cash incentive awards.
The aggregate number of shares of Common Stock reserved for issuance pursuant to the 2017 Incentive Plan is 14.1 million. The 2017 Incentive Plan will remain in effect, subject to the right of the Board to terminate the 2017 Incentive Plan at any time, subject to certain restrictions, until the earlier to occur of (a) the date all shares of Common Stock subject to the 2017 Incentive Plan are purchased or acquired and the restrictions on all restricted stock granted under the 2017 Incentive Plan have lapsed, according to the 2017 Incentive Plan’s provisions, and (b) ten years from the Effective Date. Reorganization Value Fresh start reporting provides, among other things, for a determination of the value to be assigned to the equity of the emerging company as of a date selected for financial reporting purposes. In conjunction with the bankruptcy proceedings, a third-party financial advisor provided an enterprise value of the Company of approximately $4.2 billion to $4.9 billion. The final equity value of $3,081.0 million was based upon the approximate low end of the enterprise value established by the third-party valuation and cash held by the Successor company in connection with the emergence from the Chapter 11 Cases, less the fair value of Successor debt issued on the Effective Date as described above. The final equity value equated to a per share value of $22.02 per equivalent common share issued in accordance with the Plan. The enterprise value of the Company was estimated using two primary valuation methods: a comparable public company analysis and a discounted cash flow (DCF) analysis. The comparable public company analysis is based on the enterprise value of selected publicly traded companies that have operating and financial characteristics comparable in certain respects to the Company, for example, operational requirements and risk and profitability characteristics. Selected companies are comprised of coal mining companies with primary operations in the United States. Under this methodology, certain financial multiples and ratios that measure financial performance and value are calculated for each selected company and then applied to the Company’s financials to imply an enterprise value for the Company. The DCF analysis is a forward-looking enterprise valuation methodology that estimates the value of an asset or business by calculating the present value of expected future cash flows by that asset or business. 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. While the Company considers such estimates and assumptions reasonable, they are inherently subject to significant business, economic and competitive uncertainties, many of which are beyond the Company’s control and, therefore, may not be realized. Changes in these estimates and assumptions may have a significant effect on the determination of the Company’s enterprise value. The assumptions used in the calculations for the DCF analysis included projected revenue, cost and cash flows for the nine months ending December 31, 2017 through each respective mine life and represented the Company’s best estimates at the time the analysis was prepared. The DCF analysis was completed using discount rates at a range of estimated weighted average costs of capital ranging from 11% to 14%. The DCF analysis involves complex considerations and judgments concerning appropriate discount rates. Due to the unobservable inputs to the valuation, the fair value would be considered Level 3 in the fair value hierarchy. Grant of Emergence Awards On the Effective Date, the Company granted restricted stock units under the 2017 Incentive Plan and the terms of the relevant restricted stock unit agreement to all employees, including its executive officers (the Emergence Awards). The fair value of the Emergence Awards on the Effective Date was $80.0 million. The Emergence Awards granted to our executive officers generally will vest ratably on each of the first three anniversaries of the Effective Date, subject to, among other things, each such executive officer’s continued employment with the Company. The Emergence Awards will become fully vested upon each such executive officer’s termination of employment by the Company and its subsidiaries without Cause or by the executive for Good Reason (each, as defined in the 2017 Incentive Plan or award agreement) or due to a termination of employment with the Company and its subsidiaries by reason of death or Disability (as defined in the 2017 Incentive Plan or award agreement). In order to receive the Emergence Awards, the executive officers were required to execute restrictive covenant agreements protecting the Company's interests. Copies of the 2017 Incentive Plan and related documents are included as Exhibits 10.6, 10.7 and 10.8 to the Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. Effect of Plan and Fresh Start Reporting Adjustments 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.
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 |  |  | $ | — |
The fresh start income tax adjustments included in the above table are comprised of tax benefits related to Predecessor deferred tax liabilities of $177.8 million, accumulated other comprehensive income of $81.5 million and unrecognized tax benefits of $6.7 million, partially offset by $12.1 million of tax expense related to the deferred tax assets of Predecessor discontinued operations. Professional fees are only those that are directly related to the reorganization including, but not limited to, fees associated with advisors to the Debtors, the unsecured creditors' committee and certain other secured and unsecured creditors.

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- Definition The entire disclosure for the description and amounts of reorganization under Chapter 11 of the US Bankruptcy Code. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 852 -URI http://asc.fasb.org/topic&trid=2209115 + Details
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