Cloud Peak Energy Resources LLC Rating Lowered To 'SD' From 'CCC' On Missed Interest Payment

  • On March 15, 2019, U.S.–based thermal coal producer Cloud Peak Energy Resources LLC elected not to make an approximately $1.8 million interest payment on its unsecured notes due 2024 and it continues to evaluate its restructuring alternatives.
  • We do not expect the company will make this payment during the 30-day grace period because of uncertainty related to its ability to cover its fixed charges and the substantial doubt about its ability to continue as going concern.
  • Therefore, we are lowering the issuer credit rating on Cloud Peak to 'SD' from 'CCC'.
  • We are also lowering the issue-level rating on the company's unsecured notes to 'D' from 'CC' and affirming the 'CCC' issue-level rating on the company's second lien notes.
NEW YORK (S&P Global Ratings) March 15, 2019--S&P Global Ratings today took 
the rating actions listed above. The downgrade follows Cloud Peak's election 
not to make an approximately $1.8 million in interest on its 6.375% unsecured 
notes due 2024. A payment default has not yet occurred under the indenture 
governing the notes, which provides a 30-day grace period. However, we do not 
believe payment will be made in the grace period given the company's 
announcement that it believes it will have insufficient cash to cover its cash 
interest and capital expenditures, and substantial doubt about its ability to 
continue as going concern. In addition, Cloud Peak's surety underwriters have 
demanded additional cash collateral securing $407.6 million of reclamation and 
lease bonds. Cloud Peak continues to evaluate its restructuring options 
including Chapter 11 of the U.S. Bankruptcy Code filing.