Foresight EnergyLP and its general partners entered into an amended with certain bondholders and otherinterested parties including MurrayEnergy Corp., on July 22.
The agreement supports a proposed global restructuring of the partnership's debt, equity matters andcorporate governance. The agreement is subject to automatic termination or expirationupon the occurrence of certain events, including a bankruptcy or a failure to close an exchange offer beforeAug. 31.
Certain holders of the company's 7.875% senior notes due 2021will exchange their notes through an offer by the partnership. They will receivebetween $117.6 and $120 million aggregate principal amount of second-liensenior convertible payment-in-kind notes, with a Sept. 30, 2017, maturity date and 15.0% per annum PIK coupon and between$285.8 million and $291.6 million aggregate principal amount of second-lien seniorsecured notes due 2021.
The new exchangeable PIK notes may be redeemed orpurchased at the option of the partnership, Murray Energy and its affiliates, ora combination of the two companies. If not redeemed, the PIK notes are to convertinto common units of Foresight Energy in an amount representing 75% of the totaloutstanding units of Foresight on Sept. 30, 2017.
Through the agreement, Foresight Reserves LP and its investors are purchasing upto $105.4 million principal amount of the notes held by other holders of the seniornotes through a tender offer. Foresight Reserves will then exchange its new affiliatenotes along with its $83 million principal amount of notes currently held for up to $180 million principal amountof the new PIK notes and up to $9.9 million principal amount of new second liennotes.
The reduces the aggregate lendercommitments under the partnership's revolving credit facility by $75 million, witha further $25 million reduction to occur Dec. 31. It also increases the interestrate applicable to borrowings under the credit agreement 1.00%. An "excesscash flow sweep" provision also provides for potential prepayment of term loansin the second half of 2016 and in 2017 in the amount of 50% of excess cash flow.
Murray Energy bought a 34% interest in Foresightwith an option to purchase 46% of the partnership for $25 million, a move a Delawarecourt ruled amounted to a change in control of the company. That determination wasthe basis of a lawsuit arguing Foresight was required to purchase notes at 101%of the principal amount tendered in addition to accrued and unpaid interest.