CHICAGO Nov 23 U.S. coal producer Peabody
Energy Corp said on Wednesday it is closer to exiting
bankruptcy, with a debt dispute between creditors fizzling as a
recent increase in coal prices boosts their chances for
Peabody filed for Chapter 11 protection in April, after a
sharp decline in coal prices left it unable to service $10
billion of debt. A creditor fight launched by some of Wall
Street's most litigious investment funds, Aurelius Capital
Management and Elliott Management, put the reorganization on
Seven months later, prices for coal used to generate power
and make steel have surged, particularly in Australia, where
Peabody expanded with the $5.1 billion acquisition of
Australia's Macarthur Coal in 2011.
The surge means that secured lenders such as Citibank are
now likely to recoup their investment, making a legal battle
over how to treat long-term debt in calculating Peabody's assets
This brings Peabody one step closer to reaching a consensual
On Wednesday, Peabody said the company was working to
resolve the dispute that pitted its secured lenders against
unsecured creditors, including distressed debt hedge funds
Aurelius and Elliott, who were seeking a larger share of
Peabody's assets in the reorganization.
"The parties are working to settle the (debt) issue as part
of broader negotiations regarding the plan of reorganization,"
Peabody spokesman Vic Svec said in an emailed statement.
Peabody expects to file its reorganization plan by
mid-December and hopes to exit bankruptcy within a year of its
April 2016 filing, Svec said.
Peabody's shares, which fell to a record low of $0.55 after
its Chapter 11 filing in April, reached $10.70 in
over-the-counter trading on Wednesday.
(Reporting by Tracy Rucinski; Editing by Steve Orlofsky)