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Arch Coal Completes Senior Note And Term Loan Offerings, Amends Credit Facility

ST. LOUIS, Nov. 21, 2012 /PRNewswire/ -- Arch Coal, Inc. (NYSE: ACI) today closed on its previously announced $375 million senior unsecured notes and $250 million incremental secured term loan.  Under the terms of the credit agreement, the $250 million incremental term loan will reduce the size of Arch's revolving credit facility to $350 million from $600 million.  The company intends to use the net proceeds from these financings for general corporate purposes.  Following these transactions, Arch has cash and investments of $1.2 billion and total available liquidity of approximately $1.4 billion, on a pro forma basis as of Sept. 30.

(Logo: http://photos.prnewswire.com/prnh/20120727/CG47668LOGO)

Separately, Arch successfully amended its senior secured revolving credit facility, relaxing the financial maintenance covenants until Dec. 31, 2015.  Among other revisions, Arch must adhere to a minimum liquidity covenant that requires the company to maintain available liquidity of at least $450 million through Dec. 30, 2015.

"Arch's recent financing efforts enhance our cash and liquidity position and eliminate potentially restrictive financial covenants, providing us with greater financial flexibility in case industry headwinds persist longer than anticipated," said John T. Drexler, Arch's senior vice president and chief financial officer.  "This comprehensive financing plan also provides Arch with tools to de-lever when coal markets recover.  While our leverage is currently above our long-term targeted range, we have no major debt maturities until 2016 and 45 percent of our outstanding debt will be pre-payable or callable within the next year."

The incremental term loan will carry an interest rate of LIBOR plus 4.50 percent initially, subject to a LIBOR floor of 1.25 percent.  The interest rate on the incremental term loan can step down to LIBOR plus 4.25 percent after 12 months from the original term loan issuance date, subject to certain conditions.  The incremental term loan was priced at 99 percent of par, resulting in a 6 percent annual yield.  

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