UPDATE: Foresight Energy LP (FELP) Misses Q4 EPS Expectations, Suspends Distribution, Negotiating Out-of-Court Restructuring

(Updated - March 15, 2016 8:10 AM EDT)

Foresight Energy LP (NYSE: FELP) reported Q4 EPS of ($0.44), may not compare to the analyst estimate of $0.05. Revenue for the quarter came in at $241.65 million versus the consensus estimate of $235.5 million.

Update on Debt Defaults

As reported previously, on December 4, 2015, the Delaware Court of Chancery issued a memorandum opinion concluding, among other things, that certain transactions with Murray Energy resulted in a “change of control” under the 2021 Senior Notes indenture (the “Notes”) and that an event of default occurred when we failed to offer to purchase the Notes. Currently, we are negotiating an out-of-court restructuring with certain holders of the Notes and our other creditors.

We have entered into forbearance agreements with respect to the Notes as well as the lenders under our securitization program. Under these agreements, the Noteholders and lenders have agreed to forbear from exercising certain rights and remedies to which they may be entitled. Both of these agreements remain in effect through March 15, 2016, unless extended by the respective parties. We have not entered into forbearance agreements with the lenders under our Credit Agreement or the lenders under our equipment financing arrangements or capital lease obligations. The lenders under these facilities may exercise any remedies available to them at any time.

As disclosed in our Annual Report on Form 10-K filed today, other events of default with respect to our Notes and other debt agreements have occurred or may occur in the future, and we may be unable to reach an agreement on the terms of an out-of-court restructuring with our Noteholders and other lenders. Please read our Annual Report on Form 10-K for additional information about our current position, including risks and uncertainties about any agreement or failure to reach an agreement with our creditors.

Our auditor’s opinion in connection with our 2015 financial statements includes an explanatory paragraph regarding the uncertainty of the Partnership’s ability to continue as a “going concern” which will result in an additional default under the terms of the Credit Agreement as well as the 2021 Senior Notes, Foresight Receivables LLC’s securitization agreement and the credit agreements governing certain equipment financings of certain of our other subsidiaries, because these agreements require delivery of financial statements without an explanatory paragraph regarding the uncertainty of the Partnership's ability to continue as a "going concern."

If an agreement on the terms of an out-of-court restructuring is not reached with our Noteholders and other lenders, it may be necessary for us to file a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in order to implement a restructuring, or our creditors could force us into an involuntary bankruptcy. If a plan of reorganization is implemented in a bankruptcy proceeding, it is likely that our equity holders would be entitled to little or no recovery, and their claims and interests would be canceled for little or no consideration.

Distributions & Outlook

FELP announced that the Board of Directors has suspended its quarterly distribution to unitholders. FELP is also suspending guidance for 2016 pending an outcome in the negotiation with its lenders.

For earnings history and earnings-related data on Foresight Energy LP (FELP) click here.

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