Peabody Energy Corporation (BTU)

[LouisDesyjr]

Expect BK on April 1 or 15, 2016

I think there is a chance that the filing may be as early as April 1. On April 1 there is some borrowing base that is redetermined or something with the credit line. While it kind of does not matter, since BTU drew the remainder down in Feb 2016, it could trigger additional collateral calls on some of the contracts. If that happens, BTU may have to file on April 1 and not even make it to the end of the 30 day grace period.

I expect that no matter what happens, when the 30 day grace period runs out on April 14, BTU will have to file Chapter 11 before the opening of the market on April 15. The first lien holders already have been pressuring BTU to file, and end up taking over the company. Why would they agree to anything else?

The only way for BTU to avoid filing for bankruptcy would be to make the missed interest payments AND come back into line on the covenants.

Even if BTU uses its cash to make the missed bond payments, there is no way to get their financials back into line on the covenants; meaning the bond holders can still force the bankruptcy.

Peabody says in filing facing pressure from lenders on debt
https://eresearch.fidelity.com/eresearch/evaluate/news/basicNewsStory.jhtml?symbols=BTU&pageno=&storyid=201603011455RTRSNEWSCOMBINED_L2N1682AF_1&provider=RTRSNEWS&product=COMBINED&;

Louis J. Desy Jr.

Disclosure: I own BTU puts.