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Peabody Energy Corporation

Coal Miner
"Peabody Energy is the world's largest private-sector coal company and a Fortune 500 company. Our production is located in the best mining regions in the United States and Australia, and we serve customers in some 25 countries on six continents. We are global leaders in sustainable mining, energy access and clean coal solutions." The Company is currently operating under Chapter 11 protection.
Peabody Energy is a major, but bankrupt, coal miner. Currently,the Company has been in Chapter 11 and on on-accrual since the IQ of 2016. However, based on a press release issued November 28th 2016, it appears the Company may exit bankruptcy protection shortly with an improved capital structure. BDC exposure is very minimal: under $1mn and limited to one BDC: American Capital Senior Floating (ACSF). We have the Company as Non Performing (due to the non-accrual), and have had a Credit Rating of 5 (which means we expect a Realized Loss to occur). We had written till November that we expected the senior debt, in which ACSF is a tiny participant, to be restructured and a major loss to follow. In one of those exceptions to the rules, coal prices have improved greatly in just a few weeks. That has allowed warring creditors to come to a settlement to allow emergence from Chapter 11. For the senior debt, the result might be repayment in full, and possibly even recovery of interest forgone over nearly a year. We're likely to be re-grading the Company from a 5 to a 2 or Performing status within weeks. The Credit Trend is Up. ACSF had already reduced its discount on its exposure to just -7% at 9-30-2016, but that could improve to a premium over par. Unfortunately for the BDC involved, the amount of debt involved in this remarkable change of fortunes in just a few months is very small. From the lowest valuation back to par would be just a $0.3mn improvement.