AEI asks senior lenders, noteholders to back prepackaged Chapter 11

New York, Jan. 28 - AEI Resources Holding, Inc. said it has begun seeking approvals from its senior lenders and noteholders for a proposed prepackaged Chapter 11 bankruptcy filing.

The Ashland, Ky. coal mining company said "a substantial percentage" of senior lenders and noteholders have already indicated support, as has the company's owner.

AEI said it has a commitment for up to $150 million of debtor-in-possession financing and $250 million of exit financing. Both financings are from a lender group led by Bankers Trust Co. and Deutsche Bank.

"This is a positive step in our efforts to create a more appropriate capital structure, to continue to strengthen AEI and to make the company more competitive," said AEI chairman and chief executive officer Don Brown in a news release. "We have been meeting with informal committees of our lenders and noteholders, and we are encouraged by their support."

AEI said neither customers nor employees should notice any difference in its operations during the Chapter 11 process.

AEI said it has suffered from heavy debt and "severe financial difficulties" at its principal bonding firm, Frontier Insurance Co. A number of states have refused to accept reclamation bonds issued by Frontier, AEI said. The coal mining company incurred significant costs - including having to post large amounts of cash as collateral and pay higher premiums - while making arrangements to replace the bonds and remain in compliance with state regulations

AEI said "a substantial portion of the DIP financing is expected to be used to resolve bonding issues."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.