By Jacob Barker

May 24, 2016 - Beleaguered coal miner Foresight Energy said Monday it has reached an agreement with the holders of $600 million of debt in an effort to restructure more than $1.25 billion it owes outside of bankruptcy court.

The St. Louis-based limited partnership, which operates several highly productive Illinois longwall mines, said that the agreement is contingent on a larger restructuring, which includes agreements with smaller creditors and some proposed corporate governance changes.

But the tentative agreement indicates Foresight has come to terms with the second of two major groups of creditors as it seeks to negotiate with creditors outside of bankruptcy court. It follows an April agreement Foresight reached with secured lenders who hold $650 million of its debt in loans and credit revolvers.

The price of the Foresight's common units jumped some 30 percent, to around $2.20, in after-hours trading following the announcement.

Foresight's troubles began after some of its creditors sued it, alleging that a change in control of the company had occurred when Ohio coal company Murray Energy purchased a large stake in the miner. In December, a Delaware court agreed, giving Foresight's lenders the right to demand early repayment.

On top of Foresight's trouble with creditors, coal markets have continued to deteriorate and a fire in one of its large mines has idled production there.

Under the agreement, bondholders would swap the debt for up to $120 million in special convertible bonds that will convert to common units if not purchased by Murray Energy or Foresight. Bondholders would also receive up to $300 million in new bonds with higher interest rates. Lastly, they would receive warrants to acquire newly issued common units of Foresight.

In addition, investors in Foresight Reserves LP, a company controlled by Foresight founder Chris Cline's the Cline Group, would buy $106 million of the outstanding bonds' principal.

Foresight said negotiations are still ongoing over terms of a larger "global restructuring." Some of the proposals for a larger settlement include giving bondholders more say in a board appointment and a chief financial officer and the establishment of a conflicts committee that oversees transactions among affiliates.