US-based mining firm Peabody Energy has signed superpriority settlement agreements with three state regulatory agencies for financial assurances regarding coal mine cleanups should the company be declared bankrupt.
Subject to bankruptcy court approval, the agreements are have been signed with Wyoming, New Mexico and Indiana states, where the company has self-bonding obligations.
In April, Peabody filed for chapter 11 bankruptcy protection in the US after struggling to stay afloat in the wake of sharp dip in coal prices and intense competition, as well as regulatory challenges that led to its inability to pay debts.
With these agreements in place, the relevant state authorities will be able to receive cash as additional assurance for Peabody's performance prior to distribution to any lender up to the full amount of the company's $200m bonding accommodation facility.
Each state is entitled to a percentage of the accommodation facility based on a proportion of self-bonding relative to the company's total obligation as of 12 April this year.
The company’s $800m debtor-in-possession financing facility includes the bonding facility, and provides financing for up to 18 months during the Chapter 11 process.
Peabody Energy Americas president Kemal Williamson said: "Peabody is continuing our actions to restore coal mined lands using best-in-class practices, and we are committed to our reclamation as we have been for decades.
"We are pleased to reach agreements that provide additional security toward our reclamation obligations and look forward to ongoing discussions regarding Peabody's reclamation bonding long-term."
Over the past ten years, the company has spent about $185m to restore 48,000 acres of land.
In the last decade, Peabody has also paid nearly $560m to the abandoned mine lands (AML) programme, and contributed over $45m last year.
With an unappropriated balance of $2.5bn, AML is intended for the restoration of lands that other coal producers operated.