UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 15, 2006 (February 10, 2006)
Arch Coal, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation)
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1-13105
(Commission File Number)
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43-0921172
(I.R.S. Employer
Identification No.) |
CityPlace One
One CityPlace Drive, Suite 300
St. Louis, Missouri 63141
(Address, including zip code, of principal executive offices)
Registrant’s telephone number, including area code: (314) 994-2700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b)) |
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01 Entry Into a Material Definitive Agreement.
On February 10, 2006, Arch Coal, Inc. (the “Company”) and certain of its subsidiaries entered
into a $100 million receivables securitization program (the “Receivables Program”) administered by
PNC Bank, National Association, as described below.
Arch Receivable Company, LLC (“Arch Receivable”), Arch Coal Sales Company, Inc. (“Arch Coal
Sales”), Market Street Funding LLC, as issuer, certain financial institutions party thereto, as
participants, and PNC Bank, National Association, as administrator, have entered into a Receivables
Purchase Agreement (the “Receivables Purchase Agreement”), dated as of February 3, 2006, which
expires on February 3, 2011, pursuant to which Arch Receivable may sell to a multi-seller,
asset-backed commercial paper conduit, on a revolving basis and without recourse, up to $100
million of eligible trade receivables that have been contributed to Arch Receivable, a
wholly-owned, bankruptcy-remote subsidiary of the Company. Although the Receivables Purchase
Agreement was dated as of February 3, it was delivered by the parties and became effective on
February 10, 2006.
Under the terms of the Receivables Program, eligible trade receivables consist of trade
receivables from certain of the Company’s operating subsidiaries. The amount available with
respect to the receivables sold into the Receivables Program is subject to customary limits and
reserves, including reserves based on customer concentration and prior past due balances. Of the
eligible pool of receivables contributed to Arch Receivable, undivided interests in only a portion
of the pool are sold to the conduit. Although the participants in the program bear the risk of
non-payment of purchased receivables, the Company has agreed to indemnify the participants with
respect to various matters, including any defaults by the Company or its operating subsidiaries
under the documents relating to the Receivables Program, and may be required to repurchase
receivables which do not comply with the requirements of the program. Arch Coal Sales, a
wholly-owned subsidiary of the Company, services the receivables sold into the Receivable Program.
The Receivables Program provides for the issuance of letters of credit for the account of the
Company and its subsidiaries. Collections under program receivables would be available to repay
any drawings under such letters of credit. The Company may also elect for funded purchases of
receivables to be made. PNC Bank, National Association has committed to issue letters of credit in
aggregate amount of up to $100 million outstanding at any time, and Market Street Funding, LLC has
committed to make funded purchases of receivables in aggregate amount of up to $100 million
outstanding at any time. However, the combined maximum commitment of both institutions is $100
million, with the result that the amount of letters of credit and funded purchases outstanding may
not exceed $100 million at any time.
The participants under the program will be entitled to receive payments reflecting a specified
discount on amounts funded under the Receivables Program, including drawings under letters of
credit, calculated on the basis of the base rate or commercial paper rate, as applicable. Arch
Receivable will pay PNC Bank, National Association a structuring fee, facility fees, program fees
and letter of credit fees (based on amounts of outstanding letters of credit) at rates that vary
with the Company’s debt ratings. Certain other fees are payable to the administrator and the
participating financial institutions.
The Receivables Program documents contain affirmative, negative and financial covenants
customary for financings of this type, including restrictions related to, among other things,
liens, payments, merger or consolidation and amendments to the agreements underlying the
receivables pool. The Receivables Purchase Agreement includes customary termination events for
facilities of this type (with customary grace periods, if applicable), including, among other
things, breaches of covenants, inaccuracies of representations and warranties, bankruptcy and
insolvency events, changes in the rate of default or delinquency of the receivables above specified
levels, a change of control and material judgments. A termination event would permit the
administrator to terminate the Receivables Program and enforce any and all rights, subject to cure
provisions, where, applicable. Additionally, the Receivables Program contains cross-default
provisions, which would allow the administrator to terminate the Receivables Program in the event
of non-payment of other material indebtedness when due, and any other event which results in the
acceleration of the maturity of material indebtedness.
Some of the financial institutions participating in the Receivables Program and/or their
affiliates have or may have had various relationships with the Company and its subsidiaries
involving the provision of a variety of financial services, including investment banking,
underwriting and commercial banking services, including
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issuances of letters of credit, for which the financial institutions and/or affiliates receive
customary fees, and, in some cases, out-of-pocket expenses.
The foregoing description is only a summary and is qualified in its entirety by the provisions
of the Receivables Purchase Agreement. Since the terms of the Receivables Purchase Agreement may
differ from the general information contained herein, you should rely on the actual terms of the
Receivables Purchase Agreement, which is filed with this report as Exhibit 10.1 and is incorporated
by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant
Information concerning the amounts for which the Company has become obligated under the
Receivables Program set forth above under Item 1.01 is hereby incorporated by reference into this
Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is attached hereto and filed herewith.
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| Exhibit |
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Description |
10.1
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Receivables Purchase Agreement, dated as of February 3, 2006,
among Arch Receivable Company, LLC, Arch Coal Sales Company, Inc.,
Market Street Funding LLC, as issuer, the financial institutions
from time to time party thereto, as LC Participants, and PNC Bank,
National Association, as Administrator on behalf of the Purchasers
and as LC Bank. |
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