Cloud Peak Energy Adopts Tax Benefit Preservation Plan for Net Operating Losses

GILLETTE, Wyo.–(BUSINESS WIRE)–Cloud Peak Energy Inc. (NYSE: CLD) (the “Company”)
announced today that its Board of Directors (the “Board”)
has adopted a Stockholder Rights Plan (the “Rights
Plan”) designed to preserve its substantial federal net
operating loss carryforwards (“NOLs”)
and other tax carryforwards, which can be utilized in certain
circumstances to offset future U.S. taxable income. As of December 31,
2018, the Company had estimated federal NOLs and other tax carryforwards
of approximately $300 million.

The Board adopted the Rights Plan, which is intended to protect the
Company’s tax benefits, after considering, among other matters, the
estimated potential value of the Company’s tax benefits, the potential
for diminution of those tax benefits upon certain ownership changes of
5% stockholders and the risk of such an ownership change occurring due
to the volatility and trading activity in the Company’s common stock.
The Company’s ability to use its NOLs would be substantially limited if
it were to experience an “ownership change” as defined under Section 382
of the Internal Revenue Code. An ownership change would occur if
stockholders that own (or are deemed to own) at least 5% or more of the
Company’s outstanding common stock increased their cumulative ownership
in the Company by more than 50 percentage points over their lowest
ownership percentage within a rolling three-year period. The Rights Plan
reduces the likelihood that changes in the Company’s investor base would
limit the Company’s future use of its tax benefits, which would
significantly impair the value of the benefits. The Company believes
that no ownership change as defined in Section 382 has occurred as of
the date of this press release.

To implement the Rights Plan, the Board declared a non-taxable dividend
of one preferred share purchase right (a “Right”)
for each outstanding share of its common stock. The Rights will be
exercisable if a person or group acquires 4.95% or more of the Company’s
outstanding common stock (exclusive of treasury shares). The Rights will
also be exercisable if a person or group that already owns 4.95% or more
of the Company’s common stock acquires additional shares (other than as
a result of a dividend or a stock split). Existing stockholders that
beneficially own in excess of 4.95% of the common stock will be
“grandfathered in” at their current ownership level. If the Rights
become exercisable, all holders of Rights, other than the person or
group triggering the Rights, will be entitled to purchase shares of the
Company’s common stock at a 50% discount. Rights held by the person or
group triggering the Rights will become void and will not be exercisable.

At any time after any person or group triggers the Rights and prior to
certain events described in the Rights Agreement, the Board may exchange
the Rights (other than Rights owned by such person or group triggering
the Rights which will have become null and void), in whole or in part,
for shares of common stock or preferred stock, at an exchange ratio of
one share of common stock, or a fractional share of preferred stock
equivalent in value thereto, per Right.

In connection with any exercise or exchange of the Rights, no holder of
a Right will be entitled to receive shares of common stock if receipt of
such shares would result in such holder, together with such holder’s
affiliates and associates, beneficially owning more than 4.95% of the
then-outstanding common stock (such shares, the “Excess
Shares”) and the Board determines that such holder’s receipt
of Excess Shares would jeopardize or endanger the value or availability
of certain tax benefits or the Board otherwise determines that such
holder’s receipt of Excess Shares is not in the best interests of the
Company. In the event of any such Board determination, in lieu of such
Excess Shares, such holder will only be entitled to receive cash or a
note or other evidence of indebtedness with a principal amount equal to
the then-current market price of the common stock multiplied by the
number of Excess Shares that would otherwise have been issuable.

The Rights are not taxable to the Company’s stockholders. The Rights
will trade with the common stock and will expire on the first day after
the Company’s next annual meeting of stockholders, unless the
stockholders ratify the Rights Plan at the next annual meeting, in which
case the term of the Rights Plan is extended to January 11, 2022. The
Rights Plan will expire under other circumstances as described in the
Rights Agreement, and the Board may terminate the Rights Plan or redeem
the Rights prior to the time the Rights are triggered.

Additional information with respect to the Rights Plan and the related
Rights will be contained in a Current Report on Form 8-K that the
Company will file with the Securities and Exchange Commission (“SEC”).
The Rights issued in the Rights Plan are issued pursuant to a Rights
Agreement dated January 11, 2019 between the Company and Computershare
Trust Company, N.A., as Rights Agent, a copy of which will be filed as
an exhibit to the Current Report on Form 8-K.

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 2017, Cloud Peak
Energy sold approximately 58 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
complementary surface assets in the Northern PRB, further building the
Company’s long-term position to serve Asian export and domestic
customers. With approximately 1,300 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 two 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, beliefs, assumptions and estimates regarding our
company, industry, economic conditions, government regulations and
energy policies and other factors. Forward-looking statements may
include, for example, statements regarding the potential future
financial benefits of the Company’s NOLs and other tax assets, our
plans, strategies, prospects and expectations concerning our business,
operating results, financial condition, liquidity 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 risk that the Company will not be able to
benefit from its NOLs or other tax assets in whole or in part.
Forward-looking statements are also subject to the risk factors and
cautionary language described from time to time in the reports and
registration statements we file with the 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 Form 8-K. Additional factors,
events or uncertainties that may emerge from time to time, or those that
we currently deem to be immaterial, could cause our actual results to
differ, and it is not possible for us to predict all of them. 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.

Contacts

Cloud Peak Energy Inc.
John Stranak
(720) 566-2932
Investor
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