The Inventory Facility is subject to certain usual and customary mandatory prepayment
events, including non-ordinary course asset sales or dispositions, subject to customary thresholds, exceptions (including exceptions for required prepayments under Arch Resources term loan facility) and
reinvestment rights.
The Inventory Facility contains certain customary affirmative and negative covenants; events of default, subject to
customary thresholds and exceptions; and representations, including certain cash management and reporting requirements that are customary for asset-based credit facilities. The Inventory Facility also includes a requirement to maintain Liquidity
equal to or exceeding $100 million at all times. As of December 31, 2024, letters of credit totaling $25.4 million were outstanding under the facility with $24.6 million available for borrowings.
Equipment Financing
On July 29,
2021, the Company entered into an equipment financing arrangement accounted for as debt. The Company received $23.5 million in exchange for conveying an interest in certain equipment in operation at its Powder River Basin operations and entered
into a master lease arrangement for that equipment. The financing arrangement contains customary terms and events of default and provides for 42 monthly payments with an average implied interest rate of 7.35% maturing on February 1, 2025. Upon
maturity, the Company will have the option to purchase the equipment.
Tax Exempt Bonds
On July 2, 2020, the West Virginia Economic Development Authority (the Issuer) issued $53.1 million aggregate principal
amount of Solid Waste Disposal Facility Revenue Bonds (Arch Resources Project), Series 2020 (the 2020 Tax Exempt Bonds) pursuant to an Indenture of Trust dated as of June 1, 2020 (as amended to date, the Indenture of
Trust) between the Issuer and Citibank, N.A., as trustee (the Trustee). On March 4, 2021, the Issuer issued an additional $45.0 million of Series 2021 Tax Exempt Bonds (the 2021 Tax Exempt Bonds and together
with the 2020 Tax Exempt Bonds, the Tax Exempt Bonds). The proceeds of the Tax Exempt Bonds were loaned to the Company pursuant to a Loan Agreement dated as of June 1, as supplemented by a First Amendment to Loan Agreement dated as
of March 1, 2021 (collectively, the Loan Agreement), each between the Issuer and the Company. The Tax Exempt Bonds are payable solely from payments to be made by the Company under the Loan Agreement as evidenced by a Note from the
Company to the Trustee. The proceeds of the Tax Exempt Bonds were used to finance certain costs of the acquisition, construction, reconstruction, and equipping of solid waste disposal facilities at the Companys Leer South mine, and for
capitalized interest and certain costs related to issuance of the Tax Exempt Bonds.
The Tax Exempt Bonds bear interest payable each
January 1 and July 1, and have a final maturity of July 1, 2045; however, the Tax Exempt Bonds are subject to mandatory tender on July 1, 2025 at a purchase price equal to 100% of the principal amount of the Tax Exempt Bonds,
plus accrued interest to July 1, 2025. The 2020 Tax Exempt Bonds and 2021 Tax Exempt Bonds bear interest of 5% and 4.125%, respectively.
The Tax Exempt Bonds are subject to redemption (i) in whole or in part at any time on or after January 1, 2025 at the option of the
Issuer, upon the Companys direction at a redemption price of par, plus interest accrued to the redemption date; and (ii) at par plus interest accrued to the redemption date from certain excess Tax Exempt Bonds proceeds as further
described in the Indenture of Trust.
The Companys obligations under the Loan Agreement are (i) except as otherwise described
below, secured by first priority liens on and security interests in substantially all of the Companys and Subsidiary Guarantors real property and other assets, subject to certain customary exceptions and permitted liens, and in any event
excluding accounts receivable and inventory; and (ii) jointly and severally guaranteed by the Subsidiary Guarantors, subject to customary exceptions.
The Loan Agreement contains certain affirmative covenants and representations, including but not limited to: (i) maintenance of a rating
on the Tax Exempt Bonds; (ii) maintenance of proper books of records and accounts; (iii) agreement to add additional guarantors to guarantee the obligations under the Loan Agreement in certain circumstances; (iv) procurement of
customary insurance; and (v) preservation of legal existence and certain rights, franchises, licenses and permits. The Loan Agreement also contains certain customary negative covenants, which, among other things, and subject to certain
exceptions, include restrictions on (i) release of collateral securing the Companys obligations under the Loan Agreement; (ii) mergers and consolidations and disposition of assets, and (iii) restrictions on actions that may
jeopardize the tax-exempt status of the Tax Exempt Bonds.
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