UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 19, 2014

 

Cloud Peak Energy Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code: (307) 687-6000

 

Not Applicable

(Former name or former address if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 1.01                                           Entry into a Material Definitive Agreement

 

The information in Item 1.02 is incorporated in this Item 1.01 by reference.

 

Item 1.02                                           Termination of a Material Definitive Agreement

 

On August 19, 2014, Cloud Peak Energy Inc. (“CPE”) entered into an Acceleration and Release Agreement with Rio Tinto Energy America Inc. (“Rio Tinto”), wherein CPE agreed to pay $45 million to Rio Tinto to terminate the Tax Receivable Agreement (“TRA”) that was established at the time of CPE’s initial public offering in 2009 in connection with Rio Tinto’s sale of membership units of Cloud Peak Energy Resources LLC to CPE, effective upon Rio Tinto’s receipt of the termination payment discussed above.  Under the Acceleration and Release Agreement, this payment settles all future liabilities that would have been owed under the TRA and the parties have agreed to a mutual release of claims under the TRA.

 

The foregoing summary of the Acceleration and Release Agreement does not purport to be complete and is qualified in its entirety by reference to the complete terms of the agreement, a copy of which is attached as Exhibit 10.1 to this Form 8-K and is incorporated in this Item 1.02 by reference.

 

Cautionary Note Regarding Forward-Looking Statements

 

This report contains “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not statements of historical facts and often contain words such as “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “estimate,” “seek,” “could,” “should,” “intend,” “potential,” or words of similar meaning. Forward-looking statements are based on management’s current expectations or beliefs as well as assumptions and estimates regarding our company, industry, economic conditions, government regulations, energy policies and other factors. Forward-looking statements include the expected tax and other benefits of this agreement with Rio Tinto, and other statements regarding the expected benefits of this transaction and our plans, strategies, prospects and expectations concerning our business, industry, economic conditions, operating results, financial condition and other matters that do not relate strictly to historical facts. These statements are subject to significant risks, uncertainties, and assumptions that are difficult to predict and could cause actual results to differ materially and adversely from those expressed or implied in the forward-looking statements, including the impact of existing and future tax laws and regulations, our company’s future results and its ability, if any, to achieve the intended tax and other benefits of this transaction, and other factors. For a discussion of some of the additional factors that could adversely affect our future results or the anticipated benefits of this transaction, refer to the risk factors described from time to time in the reports and registration statements we file with the Securities and Exchange Commission (“SEC”), including those in Item 1A - Risk Factors in our most recent Form 10-K and any updates thereto in our Forms 10-Q and current reports on Forms 8-K. There may be other risks and uncertainties that are not currently known to us or that we currently believe are not material. We make forward-looking statements based on currently available information, and we assume no obligation to, and expressly disclaim any obligation to, update or revise publicly any forward-looking statements made in this report, whether as a result of new information, future events or otherwise, except as required by law.

 

Item 7.01                                           Regulation FD Disclosure

 

On August 20, 2014, CPE issued a press release announcing the Acceleration and Release Agreement with Rio Tinto Energy America Inc., as described in Item 1.02 of this Form 8-K. The full text of the press release is furnished with this Report as Exhibit 99.1 and is incorporated in this Item 7.01 by reference.

 

The information contained in this Item 7.01 (including Exhibit 99.1) is furnished pursuant to this Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section, notwithstanding any general incorporation by reference language in other CPE filings.

 

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Item 9.01                                           Financial Statements and Exhibits

 

(d) Exhibits. The following exhibits are being filed or furnished herewith.

 

10.1                        Acceleration and Release Agreement, dated August 19, 2014, between Cloud Peak Energy Inc. and Rio Tinto Energy America Inc.

 

99.1                        Furnished press release of Cloud Peak Energy Inc., dated August 20, 2014, announcing the Acceleration and Release Agreement with Rio Tinto Energy America Inc.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	CLOUD PEAK ENERGY INC.
Date: August 20, 2014	By:	/s/ Bryan J. Pechersky
	Name:	Bryan J. Pechersky
	Title:	Senior Vice President, General Counsel and Corporate Secretary

 

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EXHIBIT INDEX

 

Exhibit No.		Description
10.1		Acceleration and Release Agreement, dated August 19, 2014, between Cloud Peak Energy Inc. and Rio Tinto Energy America Inc.
99.1		Furnished press release of Cloud Peak Energy Inc., dated August 20, 2014, announcing the Acceleration and Release Agreement with Rio Tinto Energy America Inc.

 

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Exhibit 10.1

 

ACCELERATION AND RELEASE AGREEMENT

 

THIS ACCELERATION AND RELEASE AGREEMENT (this “Agreement”), dated effective as of August 19, 2014 (the “Effective Date”) is entered into by and between Cloud Peak Energy Inc., a Delaware corporation (“CPE”) and Rio Tinto Energy America Inc., a Delaware corporation (“RTEA”).

 

RECITALS

 

WHEREAS, CPE and RTEA entered into a Tax Receivable Agreement, dated as of November 19, 2009, (the “TRA”) in which CPE and RTEA agreed to certain tax arrangements in connection with RTEA’s sale of membership units of Cloud Peak Energy Resources LLC to CPE in 2009 and related payments based on such transaction to be made over time from CPE to RTEA; and

 

WHEREAS, CPE and RTEA desire to accelerate the amount due from CPE to RTEA under the TRA and provide mutual releases thereunder, as specifically set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

AGREEMENT

 

1.                                      Acceleration Payment.  CPE shall pay RTEA Forty-Five Million Dollars ($45,000,000.00) in United States currency (the “Acceleration Payment”) in satisfaction of the acceleration and release under the TRA.  The Acceleration Payment will be made in a single lump sum by a wire transfer of immediately available funds, to a bank account designated by RTEA, no later than 1 U.S. business day after the Effective Date, without deduction, withholding or set-off for any reason. Notwithstanding anything contained in the TRA, effective upon receipt of the Acceleration Payment, (a) neither RTEA nor CPE shall have any further payment obligations under the TRA and (b) CPE agrees it shall not be entitled to any repayments of any amounts paid by CPE hereunder or under the TRA for any reason.

 

2.                                      TRA Acceleration.  Effective upon receipt of the Acceleration Payment, all other rights and obligations under the TRA shall terminate except for Sections 6.02 (Consistency), 6.03 (Cooperation), 7.04 (Governing Law) and 7.12 (Confidentiality) of the TRA (collectively, the “Surviving TRA Terms”).  The Surviving TRA Terms shall remain in effect.  CPE and RTEA agree that the entering into of this Agreement and payment of the Acceleration Payment hereunder does not constitute an Early Termination Notice (as defined in the TRA).

 

3.                                      Mutual Release.

 

(a)                                 “Released Party” means each of RTEA and CPE, as applicable, their respective affiliates, parent companies, predecessors, successors and assigns, and in the case of RTEA, shall include

 

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any affiliate of Rio Tinto plc and/or Rio Tinto Limited,(1) and each of their respective employees, officers, board members, partners, managers, members, and shareholders.

 

(b)                                 “Claims” means all claims, causes of action, demands, obligations, or liabilities of any kind, whether accrued or unaccrued, known or unknown, suspected or unsuspected, concealed or hidden, fixed or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, relating to or arising out of the TRA, including but not limited to any and all performance or payment obligations relating thereto, but does not include claims for enforcement, default, damages, or breach with respect to any provision of this Agreement or the Surviving TRA Terms.

 

(c)                                  Subject to and effective immediately upon receipt of the Acceleration Payment, (i) RTEA irrevocably releases, acquits, and discharges each CPE Released Party from any and all Claims, and (ii) CPE irrevocably releases, acquits, and discharges each RTEA Released Party from any and all Claims.

 

4.                                      Further Assurances.  If any further action is reasonably necessary to carry out the purpose of this Agreement, then each party will take such further action (including the execution and delivery of further documents) as the other party reasonably requests to carry out such purpose, including executing any agreement or providing additional information, documents and other materials for purposes of preparing any financial statement, preparing any tax return or contesting or defending any audit, examination or controversy in connection with the transactions contemplated by this Agreement.

 

5.                                      Public Disclosures.

 

(a)                                 Any press release or public statement issued at any time hereafter by a party, its representatives or its affiliates concerning this Agreement or the transactions contemplated by this Agreement will be subject to the prior written (including by way of e-mail) approval of the other party.

 

(b)                                 Notwithstanding Section 5(a) above, nothing in this Agreement shall limit a party’s ability to make such disclosures regarding this Agreement or the transactions contemplated by this Agreement (including, without limitation, filing this Agreement with the Securities and Exchange Commission or other securities regulatory authority) to the extent required or deemed appropriate by such party, taking into account the advice of such party’s counsel, to comply with applicable law, including federal securities laws, rules or regulations or the requirements of any exchange on which a party’s (or its affiliate’s) securities may be listed, quoted or traded, provided such party allows the other party reasonable time to review and suggest comments on any such disclosure prior to the issuance thereof.

 

(c)                                  Each party shall be liable for any failure of its affiliates or representatives to comply with the restrictions set forth under Sections 5(a) and (b).

 

6.                                      Authority to Execute Agreement.  By signing below, each party warrants and represents that the person signing this Agreement on its behalf has authority to bind that party and that the party’s execution of this Agreement is not in violation of any by-law, covenants and/or other restrictions placed upon them by their respective entities.

 

(1)  “Rio Tinto Limited” means Rio Tinto Limited (ABN 96 004 458 404) having its registered office at 33rd Floor, 120 Collins Street, Melbourne, Victoria 3000; and “Rio Tinto plc” means Rio Tinto plc (Company No. 719885) of 2 Eastbourne Terrace, London W2 6LG, United Kingdom.

 

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7.                                      Costs and Expenses.  Each party shall be responsible for its own costs and expenses incurred in connection with the transactions contemplated by this Agreement, including but not limited to any further actions requested pursuant to Section 4 of this Agreement.

 

8.                                      Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of New York, as outlined in Section 7.04 of the TRA.

 

9.                                      Entire Agreement.  This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral among the parties with respect to the subject matter hereof.  This Agreement shall be binding upon and insure solely to the benefits of each party hereto and their respective successors and assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

10.                               Counterparts. This Agreement may be executed by facsimile or by email of a signed Agreement to the other party and in counterparts, all of which will be considered one and the same agreement, and will become effective when counterparts have been signed by each of the parties and delivered to each other party.

 

11.                               Severability.  If any terms or other provision of this Agreement shall be determined by a court, administrative agency or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not render the entire Agreement invalid.  Rather this Agreement shall be construed as if not containing the particular invalid, illegal or unenforceable provision, and all other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party.  Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties shall negotiate in good faith, and without any further consideration, to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent permitted under applicable law.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, RTEA and CPE have duly executed this Acceleration and Release Agreement as of the Effective Date.

 

 

	RIO TINTO ENERGY AMERICA INC.
	By:	/s/ James Berson
	Name:	James Berson
	Title:	President and Chief Executive Officer
	CLOUD PEAK ENERGY INC.
	By:	/s/ Colin Marshall
	Name:	Colin Marshall
	Title:	President and Chief Executive Officer

 

[Signature page for Acceleration and Release Agreement]

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

August 20, 2014

 

Contact:

Cloud Peak Energy Inc.

Karla Kimrey

Vice President, Investor Relations

720.566.2932

 

CLOUD PEAK ENERGY ANNOUNCES TERMINATION OF
TAX RECEIVABLE AGREEMENT WITH RIO TINTO

 

Gillette, Wyo, August 20, 2014 — Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal producers and the only pure-play Powder River Basin (“PRB”) coal company, announced today it has agreed to pay $45 million to Rio Tinto to terminate the Tax Receivable Agreement (“TRA”) that was established at the time of Cloud Peak Energy’s Initial Public Offering in 2009.  Under the acceleration and release agreement with Rio Tinto, this payment settles all future liabilities that would have been owed under the TRA.  At June 30, 2014, Cloud Peak Energy carried an undiscounted liability of $103 million in respect of its estimated future obligations under the TRA and anticipated making cash payments of approximately $14 million each year in 2014 and 2015 and additional payments in some subsequent years.

 

The settlement will result in a non-cash gain during the third quarter of approximately $58 million before tax and approximately $37 million after adjustments to the associated deferred tax assets.  Cloud Peak Energy retains the deferred tax assets related to the step up in tax basis as a result of Rio Tinto’s disposal of the business.  As such, Cloud Peak Energy will continue to benefit from increased tax depreciation and does not expect any increase in cash income taxes payable as a result of this transaction.

 

Michael Barrett, Cloud Peak Energy’s Executive Vice President and Chief Financial Officer, commented, “We are pleased to be able to settle our obligations under the TRA which will allow us to take full advantage of the step up in tax basis related to our IPO transactions.  Ending the TRA will also significantly reduce the accounting and audit burden associated with this complex agreement.  We see this as an efficient and accretive use of capital at this time, and a good opportunity to further manage our balance sheet liabilities.”

 

About Cloud Peak Energy®

 

Cloud Peak Energy Inc. (NYSE:CLD) is headquartered in Wyoming and is one of the largest U.S. coal producers and the only pure-play Powder River Basin coal company.  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 Antelope and Cordero Rojo mines are located in Wyoming and the Spring Creek mine is located in Montana.  In 2013, Cloud Peak Energy shipped 86.0 million tons from its three mines to customers located throughout the U.S. and around the world.  Cloud Peak Energy also owns rights to substantial undeveloped coal and complimentary surface assets in the Northern PRB, further building the company’s long-term position to serve Asian export and domestic customers.  With approximately 1,700 total employees, the company is widely recognized for its exemplary performance in its safety and environmental programs.  Cloud Peak Energy is a sustainable fuel supplier for approximately four percent of the nation’s electricity.

 

 

Cautionary Note Regarding Forward-Looking Statements

 

This release contains “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not statements of historical facts and often contain words such as “may,” “will,” “expect,” “believe,” “anticipate,” “plan,” “estimate,” “seek,” “could,” “should,” “intend,” “potential,” or words of similar meaning. Forward-looking statements are based on management’s current expectations or beliefs as well as assumptions and estimates regarding our company, industry, economic conditions, government regulations, energy policies and other factors. Forward-looking statements include the expected tax and other benefits of this agreement with Rio Tinto, and other statements regarding the expected benefits of this transaction and our plans, strategies, prospects and expectations concerning our business, industry, economic conditions, operating results, financial condition and other matters that do not relate strictly to historical facts. These statements are subject to significant risks, uncertainties, and assumptions that are difficult to predict and could cause actual results to differ materially and adversely from those expressed or implied in the forward-looking statements, including the impact of existing and future tax laws and regulations, our company’s future results and its ability, if any, to achieve the intended tax and other benefits of this transaction, and other factors. For a discussion of some of the additional factors that could adversely affect our future results or the anticipated benefits of this transaction, refer to the risk factors described from time to time in the reports and registration statements we file with the Securities and Exchange Commission (“SEC”), including those in Item 1A - Risk Factors in our most recent Form 10-K and any updates thereto in our Forms 10-Q and current reports on Forms 8-K. There may be other risks and uncertainties that are not currently known to us or that we currently believe are not material. We make forward-looking statements based on currently available information, and we assume no obligation to, and expressly disclaim any obligation to, update or revise publicly any forward-looking statements made in this release, whether as a result of new information, future events or otherwise, except as required by law.

 

SOURCE: Cloud Peak Energy Inc.

 

Cloud Peak Energy Inc.
Karla Kimrey, 720.566.2932
Vice President, Investor Relations