History
Foresight Energy floated in 2014, restructured its debt under Murray Energy's backing, then went through Chapter 11 in 2020 that wiped out unitholders and dissolved the partnership.
2014-2016: Listing and a debt squeeze
Foresight Energy LP began trading on the New York Stock Exchange in June 2014. On June 23 it closed its IPO, selling 17,500,000 common units at $20.00 each. About $210.0 million of the proceeds went to repay debt of the operating company, and about $4.0 million to offering expenses. A cash distribution also went to Foresight Reserves and Michael Beyer, who kept all other interests apart from the public units and employee incentive units.
The record then goes quiet until early 2016, when trouble surfaced. Events of default had occurred under a receivables facility (a loan secured on money owed by customers) set up in January 2015, including a missed payment on January 15, 2016. Lenders agreed to hold off on remedies, and the facility was permanently cut to $50 million.
In April and May 2016 Foresight signed support agreements with some bank lenders and some holders of its 7.875% Senior Notes. The deals involved cutting revolver commitments, raising interest rates and swapping notes for new second-lien notes and convertible PIK notes (notes paying interest in more notes). If the convertible notes were not redeemed or bought, they would convert into 75% of the partnership's units, which would heavily dilute existing unitholders. Deadlines slipped in July, and Murray Energy, Foresight Reserves, Christopher Cline and Cline Development signed on in support. Amended terms followed on July 22, including warrants for 4.5% of units.
On August 30, 2016 the restructuring was completed. Foresight exchanged $599.825 million of 7.875% notes for $349.1 million of second-lien PIK notes due 2021, $299.859 million of exchangeable PIK notes and 516,825 warrants. The 75% conversion risk remained if the exchangeable notes were not repaid or bought by October 3, 2017.
2017-2018: Murray Energy steps in
In February and March 2017 Foresight moved to refinance. It launched a private offering of second-lien notes, first announced at $500 million, and priced $425 million of 11.50% second-lien notes due 2023. It also arranged an $825 million term loan and a $170 million revolver. Murray Energy was expected to raise its voting interest in the general partner to 80%, with Robert D. Moore becoming chairman.
The refinancing closed on March 28, 2017. Murray Energy bought 9,628,108 new common units for $60.6 million, which repaid $54.5 million of the second-lien notes. The remaining PIK notes were called and discharged. This removed the threat of the exchangeable notes converting into 75% of the units, though the new Murray units diluted existing holders.
In 2018 a dispute over the Deer Run Mine lease with WPP LLC came to a head. In April, Foresight's Hillsboro subsidiary asked a court to declare the lease ended in March 2015 because all mineable coal had been mined. The company said Deer Run would be permanently closed, with an expected impairment charge of $134 million to $172 million. On October 19, 2018 the litigation with Natural Resource Partners was settled. Foresight paid WPP $25 million, and annual minimum royalties on the Hillsboro lease were cut from $30 million to $11 million through 2033, plus a 6% tonnage royalty.
2019: Distress and delisting
In June 2019 the NYSE warned that the units had failed the rule requiring an average closing price above $1.00 over 30 trading days. Foresight had six months to cure. In October, holders of a majority of the 11.50% notes extended the grace period for a missed interest payment from 30 to 90 days and waived the default from the missed October 1 payment. The company warned of going-concern risk.
On October 29 Murray Energy Holdings, which controls Foresight's general partner, filed for Chapter 11 in Ohio. Foresight itself did not file, but it had a management services agreement, a lease, a royalty agreement and coal-sale arrangements with Murray. On November 8 the NYSE suspended trading in the units over 'abnormally low' prices. Foresight did not appeal, and by December the units traded on the OTCQX as 'FELPU'. In December the interest grace period was stretched to 150 days.
2020: Chapter 11 and dissolution
In February 2020 the grace period was extended again, to 180 days. On March 10 Foresight and its affiliates filed Chapter 11 in the Eastern District of Missouri with a restructuring support agreement backed by over 69% of first-lien lenders and over 82% of second-lien noteholders. The plan would cut about $1.1 billion of debt. First-lien lenders would get 92.75% of the new equity and noteholders 7.25%, while all existing units and other equity interests would be cancelled with no recovery. A $175 million debtor-in-possession loan, signed March 11 with Cortland Capital Market Services LLC as agent, funded the case.
The court confirmed the plan on June 24, 2020. It cut over $1 billion of debt and about $94 million of expected annual cash interest. The company was to emerge with a $225 million exit facility, $75 million of which converts to equity after 60 days, and about $60 million of cash liquidity.
The plan took effect on June 30, 2020. The 80,996,773 common and 64,954,691 subordinated units outstanding as of May 1, 2020 were extinguished without consideration. Foresight Energy LP, its general partner and Foresight Energy LLC were to be dissolved. The Williamson, Sugar Camp, Macoupin and Hillsboro mining complexes, the Sitran river terminal and the reserves moved to Foresight Energy Operating LLC, held by Foresight Energy Resources LLC. As of July 1, 2020 the company said it would file a Form 15 to suspend its SEC reporting.
Written from the 27 story beats below (2014 to 1 July 2020), which come from the company's own announcements and filings.