NATION'S BIGGEST COAL COMPANY FILES FOR BANKRUPTCY
Coal giant Peabody Energy files for Chapter 11 bankruptcy
Nathan Bomey, USA TODAY 9:39 a.m. EDT April 13, 2016
April 13 -- U.S. coal giant Peabody Energy filed for bankruptcy, the most powerful convulsion yet in an industry that's enduring the worst slump in decades.
The nation's biggest coal company, Peabody Energy (BTU), filed for Chapter 11 bankruptcy protection on Wednesday as the coal industry grapples with the fallout of low natural gas prices, costly regulations and legacy costs.
Peabody had warned in March that "sustained depressed" coal prices had placed it on the edge of insolvency.
The company also suffered a sharp blow from its exposure to the bankruptcy of former subsidiary Patriot Coal, one of several coal giants to topple into bankruptcy court over the last couple years.
Low natural gas prices, the sluggish Chinese economy and U.S. environmental regulatory pressure have compounded the financial pressures facing coal companies,which include costs such as pensions and retiree health care obligations, analysts say.
Peabody has posted four consecutive yearly losses, including a $2 billion loss in 2015 as revenue fell 17% to $5.6 billion.
The company listed $10.1 billion in debts and $11 billion in assets, including ownership interest in 26 active mines in the U.S. and Australia. Shareholders with at least 5% of the company are Blackrock, Kopernik Global Investors, Vanguard Group and Susquehanna Securities, according to a court filing.
"Through this process, the company intends to reduce its overall debt level, lower fixed charges, improve operating cash flow and position the company for long-term success, while continuing to operate under the protection of the court process," Peabody said Wednesday in a statement.
Trading of the company's shares (BTU), which closed at $2.07 on Tuesday, will be suspended. Two years ago, the stock hit a high of $299.10 in the first quarter of 2014.
"This was a difficult decision, but it is the right path forward for Peabody. We begin today to build a highly successful global leader for tomorrow," CEO Glenn Kellow said. "This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we've made in recent years and lay the foundation for long-term stability and success in the future."
Peabody said it had secured $800 million in bankruptcy financing from a group that includes secured and unsecured creditors to maintain operations.
Peabody noted that the sale of assets in New Mexico and Colorado had collapsed after a prospective buyer could not complete the deal.
The company hired law firm Jones Day to provide bankruptcy counsel, investment bank Lazard for financial advice and FTI Consulting for restructuring guidance.
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Replies to This Discussion
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Permalink Reply by P.G. on -
Will Natural Gas and Oil be next?
“By the time we get through all of my conditions, I do not think th...
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Permalink Reply by Skip Peel - Mineral Consultant on
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I doubt it. Coal is far too dirty and costly to mitigate GHG. Oil and natural gas have the potential for vast improvements in their carbon footprint.
This is just one of a number of recent technological developments that will impact the carbon footprint of natural gas sourced energy.
http://www.gohaynesvilleshale.com/forum/topics/fossil-fuel-electric...
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Permalink Reply by P.G. on
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Yes, it sounds like nonsense.
But it sounds like she is trying to make an argument to regulate Fracking to the point it won't be worth it.
Obama made similar remarks about coal. And he wasn't fooling.“By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place,” she said.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Both parties run to their bases in the primaries (nominating contests) and move toward the middle in the general election. I'm not concerned what "she" might do in regard to fracking. No one including the president of the US is going to stop fracking. There will be tighter regulations and there are a number that make sense and do not make the industry unprofitable no matter how much it may protest.
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Permalink Reply by kittycatmama on
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Hey didn't George Soros buy up some of those coal company stocks when they started drastically falling. I know he was in Peabody
. http://www.marketwatch.com/story/jump-on-the-george-soros-coal-trai...
Soros backed Obama in 2008 & 2012 and is backing Hillary now AND he benefits from coal's crisis. Just some info to research.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Following Soros's lead regarding coal is no more illogical than following T. Boone's on wind farms seven years ago. The electrical generation industry is getting away from coal because it is a wise business decision. Even if there were no pending environmental regs poised to render coal less economic, it wouldn't matter. Private industry is rightly rejecting coal as a fuel source for future projects.
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Permalink Reply by kittycatmama on
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George Soros is never Illogical. He is in a league of his own. (read how he broke the Bank of England). T Boone is in the minor leagues compared to George. George was the major funder of Obama and is now funding Hillary (and Kasich and Bernie to a lesser extent. One doesn't ever want just one horse in a race). I don't think any care about the environment--it is the bottom dollar. They short companies and bet on that company failing. They make their money off of other's misfortunes.
Fracking has been under their attack too. If ONE person controls energy markets they control the world. Think about it. I follow the markets closely. So watch and see in next few months. Soros will be the one who benefits from Peabody's bk. They were not far from bk when he purchased stock in them so he saw future benefits. On an aside, he is also buying stock in AMUNITION manufacturers.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I think you give far too much credence to Soros. However I'm sure you would get agreement from the conspiracy crowd.
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Permalink Reply by kittycatmama on
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My opinion of him has nothing to do with the conspiracy crowd and everything to do with what he has done to the markets. There are people out there (The Hunt brothers and silver for an example) who create markets only to short them. They make billions that way. Housing market was another thing. Hedge funds bet on it crashing and actually made money off the crash while individuals suffered. Google Soros history including his childhood when you have some free time. It is self explanatory. Numbers don't lie.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Then please explain how Soros made a wise investment in Peabody. Or any other coal company.
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Permalink Reply by Two Dogs, Pirate on
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Soros is probably betting the republicans are going to take over this fall making his investment skyrocket. As others have said in the past the only green movement he supports is the dollar bill.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Coal is dead regardless of who is in the White House or which party has a majority in Congress. Unless however Congress would choose to pass legislation requiring electrical utilities to burn coal. That industry has already made up its mind. They are going to natural gas, combined cycle technology. They won't be going back to coal.
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