On September 17, 2015, the U.S. Bankruptcy Court for the Eastern District of Virginia entered a final order approving $692 million of debtor-in-possession credit facilities (the “DIP Financing”) for Alpha Natural Resources, Inc. and certain of its affiliates (“Alpha”). Davis Polk advised the administrative agent and collateral agent, and the sole lead arranger and bookrunner, in connection with the DIP Financing.

The DIP credit agreement provides for a $300 million term loan facility (of which $100 million was funded upon approval of the interim DIP order and used to cash collateralize “back-to-back” letters of credit to support letters of credit issued under a prepetition receivables facility), a second-out letter of credit facility for the anticipated roll-up of approximately $192 million of letters of credit issued under Alpha’s prepetition revolving credit facility and a $100 million bonding accommodation, subject to increase upon approval by the required lenders, that can be used, at Alpha’s option, either to cash-collateralize letters of credit to secure surety bonds in favor of state environmental regulators or to provide a superpriority administrative claim to such regulators. The final order also approved limited cross-collateralization DIP facility liens for the lenders under the prepetition credit facilities and holders of Alpha’s existing second-lien secured notes and contemplates a $200 million uncommitted revolving DIP credit facility, which is subject to entry of a further order from the Bankruptcy Court.

Alpha is one of the largest and most regionally diversified coal suppliers in the United States. With affiliate mining operations in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming, Alpha supplies metallurgical coal to the steel industry and thermal coal to generate power to customers on five continents. Alpha filed for protection under chapter 11 of the U.S. Bankruptcy Code on August 3, 2015.

The Davis Polk insolvency and restructuring team included partners Damian S. Schaible and Eli J. Vonnegut and associates Damon P. Meyer, Christopher Robertson, Aryeh Ethan Falk, Bradley Schecter and Caitlin L. Wood. The credit team included partner Kenneth J. Steinberg and associate Hilary Dengel. Counsel Lawrence R. Plotkin provided real estate advice. All members of the Davis Polk team are based in the New York office.

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