Arch Coal to launch $500 million revolver Thursday

By Sara Rosenberg

New York, Nov. 17 - Arch Coal Inc. is scheduled to hold a bank meeting in St. Louis on Thursday for a proposed $500 million five-year revolving credit facility, according to a market source. PNC, Citigroup and JPMorgan are the lead banks on the deal.

The revolver is being launched to lenders with an interest rate of Libor plus 225 basis points and will replace the company's existing $350 million revolver, the source said.

At the end of October, the St. Louis coal producer sold common stock for net proceeds of $230.6 million and issued $250 million 6¾% senior notes. Although some of the proceeds from these two offerings went to revolver and term loan repayment, remaining proceeds are available for general corporate purposes.

The bond deal, equity and increased revolver are all in anticipation of the company's need for extra liquidity over the next few years as it has recently won a new federal coal lease for Little Thunder and another federal lease is coming up for bid. Furthermore, the liquidity is needed for development of new property including the development of the Mountain Laurel longwall mine in Central Appalachia, the source explained.

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