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Private Offers To Exchange New Pari Passu Secured First Lien Notes (defined Below) And Cash For Certain Outstanding Senior Debt Securities Of The Issuer (collectively, The " Existing Notes ")

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PEABODY ENERGY CORP | Peabody Energy Corporation

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Title: Private Offers to Exchange New Pari Passu Secured First Lien Notes (defined below) and cash for certain outstanding senior debt securities of the Issuer (collectively, the " Existing Notes ")
Date: 4/13/2016
Industry: Coal     Sector: Energy

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Exhibit 99.2

KLNF Comments - February 20, 2016

Subject to FRE 408 & All Other Applicable Privileges

and Confidentiality Agreements

Peabody Energy Corporation (the “ Issuer ”)

Private Offers to Exchange

New Pari Passu Secured First Lien Notes (defined below) and cash for

certain outstanding senior debt securities of the Issuer (collectively, the “ Existing Notes ”)

This proposal for the Exchange Offers and related transactions is preliminary and non-binding and shall not be construed as a commitment to take any steps to effect the Exchange Offers or any other transaction.

Summary of Principal Terms

 

Exchange :

  

Subject to the acceptance priority level for each series of Existing Notes set forth in the table below, offers to exchange (the “ Exchange Offers ”) the outstanding Existing Notes held by qualified institutional buyers for the following:

 

(i)     Up to $250,000,000 in aggregate principal amount of new 6% Pari Passu Secured First Lien Notes due 2021 (the “ New Pari Passu Secured First Lien Notes ”) issued by the Issuer; and

 

(ii)    Up to $350,000,000 in cash.

 

No additional amounts shall be payable in respect of accrued but unpaid interest on the Existing Notes that are exchanged.

Subject Securities and Acceptance Priority Levels :

 

 

  

 

  

 

 

  

 

 

  

Principal Amount of New Pari Passu
Secured First Lien Notes and Cash
(1)

 

Title of
Series of
Existing Notes

  

Maturity
Date

  

Aggregate
Principal Amount
Outstanding

 

  

Acceptance
Priority
Level

 

  

Notes
Consideration
(Par Value)

 

 

Cash
Consideration

 

 

Early
Tender
Premium
(Cash)

 

 

Total
Exchange
Consideration
(2)

 

6.00% Senior Notes due 2018 (the “ 2018 Notes ”)

  

Nov.
2018

  

$

1,518,800,000

  

  

 

1

  

  

$

[81.08

 

$

[83.51

 

$

[30.00

 

$

[194.59

10.00% Senior Secured Second Lien Notes due 2022 (the “ Existing Second Lien Notes ”)

  

March
2022

  

$

1,000,000,000

  

  

 

2

  

  

$

[108.11

 

$

[121.35

 

$

[30.00

 

$

[259.46

6.50% Senior Notes due 2020 (the “2020 Notes” )

  

Sept.
2020

  

$

650,000,000

  

  

 

3

  

  

$

[64.86

 

$

[60.81

 

$

[30.00

 

$

[155.68

(continued)

 

(1)  

For each $1,000 principal amount of Existing Notes. [NTD: For discussion purposes only. Subject to further review by the Issuer and its advisors].

 

(2)  

Includes the Early Tender Premium of $[30.00] in cash.

 


 

  

 

  

 

 

  

 

 

  

Principal Amount of New Pari Passu
Secured First Lien Notes and Cash
(3)

 

Title of
Series of
Existing Notes

  

Maturity
Date

  

Aggregate
Principal Amount
Outstanding

 

  

Acceptance
Priority
Level

 

  

Notes
Consideration
(Par Value)

 

 

Cash
Consideration

 

 

Early
Tender
Premium
(Cash)

 

 

Total
Exchange
Consideration
(3)

 

6.25% Senior Notes due 2021 (the “2021 Notes” )

  

Nov.
2021

  

$

1,339,600,000

  

  

 

4

  

  

$

[64.86

 

$

[60.81

 

$

[30.00

 

$

[155.68

7.875% Senior Notes due 2026 (the “2026 Notes” )

  

Nov.
2026

  

$

250,000,000

  

  

 

5

  

  

$

[64.86

 

$

[60.81

 

$

[30.00

 

$

[155.68

 

  

Eligible holders must validly tender their Existing Notes at or prior to 5:00 p.m., New York City time, on a specified early tender date (such date the “ Early Tender Date ”), in order to be eligible to receive the applicable “ Total Exchange Consideration ” shown in the table above. Existing Notes tendered after the Early Tender Date but prior to expiration of the Exchange Offers will be eligible to receive only the applicable “ Exchange Consideration ” set out in such table, which does not include the “ Early Tender Premium ”. The Issuer may modify or terminate any consent solicitations in connection with the Exchange Offers upon prior written notice thereof (to include, with respect to any modifications, the nature thereof) to the Specified Holders. 4

Conditions :

  

The closing of the Exchange will be conditioned on:

 

(i)     a minimum of [    ]% of the aggregate principal amount of all series of Existing Notes not held by the Specified Holders electing to participate in the Exchange Offers (the “ Overall Minimum Condition ”); ][subject to further discussion]

 

(ii)    the consummation of the Additional Private Exchange Transactions (defined below) with the Specified Holders, which transactions may be consummated substantially concurrent with each other;

 

(iii)  the consummation of the Issuer’s sale of its New Mexico and Colorado assets to Bowie Resources Partners; and

 

(iv)   customary additional conditions.

 

The conditions set forth in conditions (i) through (iv) above are waiveable by the Issuer with the consent of each of the Specified Holders.

Additional Private Exchange Transactions :

  

Elliott/Aurelius/CapRe (collectively, the Specified Holders ) agree (a) not to tender their Existing Notes in the Exchange Offers; provided, however, that CapRe may tender up to $[30.0] million aggregate principal amount of Existing Notes beneficially owned, (b) to extend the maturity date of the 2018 Notes held by them by two years to November 2020 with PIK interest payable on such 2018 Notes instead of cash pay interest for a period of two years (payable monthly, beginning on the last interest payment date), (c) to receive PIK interest in lieu of cash pay interest for a period of two years (payable monthly, beginning on the last interest payment

 

(3)  

Includes the Early Tender Premium of $[30.00] in cash.

 

4

Peabody to advise as to any additional consent solicitations it intends to seek.

 

2


  

date) (5) with respect to each of the Existing Second Lien Notes, the 2020 Notes, the 2021 Notes and the 2026 Notes held by the Specified Holders (collectively with the 2018 Notes, the “ SH Notes ”), and (d) exchange $200,000,000 of SH Notes 6 for $200,000,000 of PAC Notes 7 , provided that all accrued and unpaid interest on the SH Notes shall be paid in kind in applicable SH Notes and certain cash payments of interest by the Issuer may be required to avoid material adverse tax consequences (collectively, the “ Additional Private Exchange Transactions ”). The closing of the Additional Private Exchange Transactions is conditioned on the consummation of the Exchange Offers contemplated by this term sheet, which transactions may be consummated substantially concurrent with each other. The indentures governing the modified SH Notes shall be substantially identical to the indentures governing the Existing Notes in effect immediately prior to the Exchange Offers and not modified in any way except: (i) to the extent that the limitation contained in Section 4.09 of the indenture governing the Existing Second Lien Notes is modified or otherwise eliminated in connection with a consent solicitation, such covenant would apply as modified or eliminated, as the case may be, to the modified Second Lien Notes held by the Specified Holders; (ii) the extension of the maturity date of the 2018 Notes held by the Specified Holders by two years to November 2020 and (iii) provisions that the Specified Holders shall receive PIK interest in lieu of cash pay interest for a period of two years.

New Pari Passu Secured First Lien Notes (the “New Notes”)

 

Issuer :

  

Peabody Energy Corporation.

Maturity :

  

March 15, 2021.

Interest :

  

Payable semi-annually in cash at 6.0% per annum.

Ranking :

  

Pari passu with the Issuer’s existing first lien credit facilities (the “ Existing First Lien Facilities ”) evidenced by that certain credit agreement, dated as of June 18, 2010, as amended prior to the date hereof, including by that certain Omnibus Amendment Agreement, dated as of February 5, 2015 (as amended, the “ Existing First Lien Credit Agreement ”).

Guarantors :

  

Identical to the subsidiaries of the Issuer (the “ Guarantors ”) that guaranty the Existing First Lien Facilities.

Security :

  

Identical to the collateral securing the Existing First Lien Facilities.

Pari Passu Intercreditor Agreement :

  

Intercreditor agreement among the Issuer, the administrative agent under the Existing First Lien Credit Agreement and the collateral trustee of the New Pari Passu Secured First Lien Notes, and substantially in the form of Exhibit I-2 of the Existing First Lien Credit Agreement, subject to changes to reflect current market practice or that are not adverse to the lenders under the Existing First Lien Credit Agreement.

 

(5)  

For the avoidance of doubt, the interest payments on the Existing Second Lien Notes and the 2020 Notes due on March 15, 2016 shall be paid in kind.

 

6  

ACE to provide which SH Notes are to be exchanged.

 

7  

It is contemplated that such exchange shall be effectuated by Peabody purchasing for $200,000,000 the PAC Notes from Peabody AssetCo and then Peabody using such PAC Notes as consideration for the purchase of $200,000,000 of SH Notes.

 

 

 

3


First Lien/ Second Lien Intercreditor :

  

The New Notes will constitute “Additional Senior Debt” under that certain intercreditor agreement, dated March 16, 2015, among Peabody Energy Corporation, the other grantor parties thereto, U.S. Bank, National Association, as Second Priority Representative, and Citibank, N.A., as Senior Representative.

Optional Redemption :

  

The New Notes will be redeemable at the Issuer’s option, in whole or in part, at any time at a redemption price equal to 100% of the principal amount of the New Notes to be redeemed, together with accrued and unpaid interest, if any, to, but excluding, the redemption date.

Change of Control :

  

The Issuer will be required to make an offer to repurchase the New Notes following the occurrence of a “change of control triggering event” with respect to the Issuer (to be defined in a manner consistent with the 2018 Notes) at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.

Covenants and Events of Default :

  

To be consistent with the Existing Second Lien Notes, except as follows:

 

(a)    there shall be no limitations on the ability of existing or future non-guarantor subsidiaries to guarantee indebtedness of the Issuer or any of its subsidiaries; and

 

(b)    there shall be no limitation on the ability of such non-guarantor subsidiaries to incur indebtedness.

Governing Law :

  

New York.

 

New Senior Secured Notes Issued by Peabody Asset Holding Company (the “PAC Notes”)

Issuer :

  

Newly created direct or indirect wholly owned subsidiary of Peabody, organized as a Delaware limited liability company that is designated as an “Unrestric


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