Company officials said in an May 10 earnings call and release that its total coal sales revenues for the most recently ended quarter was $163.1 million, which it said was impacted by a sales volumes drop of more than 26% and 7.2% decrease in coal sales prices year-over-year. In the first quarter of 2015, coal sales were $238.9 million.
Coal sales decreased $75.8 million, the company said, over the prior-year quarter primarily because of a fall in sales volumes of 1.3 million tons on weak market conditions.
Foresight noted that its net loss also came as a result of $9.7 million in costs it incurred for debt restructuring tied to its secured and unsecured lender negotiations. It also had costs of $5.9 million for the transition and reorganization of the Murray transaction and another $3.8 million of direct and indirect costs resulting from the fire at its Hillsboro mine, which remains idle with no certain timeline for production restart.
“Our industry continues to be faced with extreme challenges resulting from competition from low cost natural gas, government regulations impacting electric utilities, and a reduction in demand for power domestically,” President and CEO Robert Moore said. “Foresight Energy, while dealing with the external industry challenges and matters related to the bondholder litigation, continues to focus on being the safest, lowest cost source of coal supplied from the Illinois Basin, and continues to believe that its cost structure will enable the company to weather the depressed coal market better than its competitors.”
The producer noted in its report that it remains in default under all of its long-term debt and capital lease obligations. This has, in turn, kept it from accessing borrowings or other credit extensions within its revolving facility.
With a management team that is focused on the liquidity preservation, Foresight said its lack of access to credit has had an overall adverse effect on that liquidity.
Specifically, the restraints prohibited the payment of $23.6 million of interest owed to the unsecured noteholders in February, which resulted in an additional event of default. Foresight had $16.2 million in cash on hand as of March 31.
Additionally, the recent losses have impacted its debt covenant compliance; Foresight was not in compliance with its consolidated net senior secured leverage ratio, which constituted an additional event of default. It entered a transaction support agreement, or Lender TSA, on April 18.
“Foresight has entered into forbearance agreements with certain of its unsecured noteholders and the lenders to its accounts receivable securitization program to forbear from exercising certain rights and remedies to which they may be entitled until May 17, 2016, and July 15, 2016, respectively,” the company said.
“The negotiations between the partnership and its affiliates and the creditors, equityholders and other stakeholders of the partnership concerning the terms of the proposed restructuring transactions are ongoing and have not been finalized. There can be no assurance that the partnership will reach an agreement with the noteholders by May 17, nor can there be any assurance that any of the foregoing parties to whom such restructuring transactions have been proposed will agree to the terms of any such transactions.”