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Cloud Peak Energy Voluntarily Files for Chapter 11

Vinson & Elkins is advising Cloud Peak Energy Inc., the only pure-play Powder River Basin coal company, in the filing of voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company intends to continue a marketing and sale process for all of its assets. Cloud Peak Energy expects its mines will continue normal operations throughout the process, safely and efficiently meeting all customer commitments.

Colin Marshall, President and Chief Executive Officer of Cloud Peak Energy, commented in a statement, “Over the past several months, Cloud Peak Energy has thoroughly evaluated strategic alternatives to address the challenging market conditions in our industry. We believe, at this time, that a sale process in Chapter 11 will provide the best opportunity to maximize value for Cloud Peak Energy.”
The Company filed their chapter 11 petitions on Friday, May 10, and the first day hearing was held in front of Judge Gross on Tuesday, May 14. The court granted all relief sought, and additional hearings have been set to approve the Company’s proposed bidding procedures, and second day motions.  
In conjunction with the filing, and subject to final court approval, Cloud Peak Energy has received a commitment for approximately $35 million in debtor-in-possession financing from certain of the company’s prepetition secured noteholders. During the first day hearing the bankruptcy court approved $10 million of DIP financing on an interim basis. The DIP financing, combined with Cloud Peak Energy’s cash on hand and funds generated from ongoing operations, are expected to provide sufficient liquidity for the company to continue operating in the ordinary course during the sale process. The Company also announced that it has entered into an Amended and Restated Sale and Plan Support Agreement with holders of approximately 62% in dollar amount of the company’s secured notes due 2021 and more than 50% in dollar amount of the company’s unsecured notes due 2024. 
As one of the safest coal producers in the nation, Cloud Peak Energy mines low sulfur, subbituminous coal and provides logistics supply services. The Company owns and operates three surface coal mines in the PRB, the lowest cost major coal producing region in the nation.
The V&E team is led by partners David Meyer and Paul Heath and senior associates Lauren Kanzer and Jessica Peet.

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