Arch Coal was widely expected to go bankrupt after it delayed a $90 million interest payment that was due in December.
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Shares of Arch (NYSE: ACI) were down over 50 percent in early trading Monday.
The company said it reached agreements with lenders to reduce its debt by about $4.5 billion.
The court filing listed $5.8 billion in assets and $6.5 billion in debt.
The company expects to continue operations during the restructuring.
“After carefully evaluating our options, we determined that implementing these agreements through a court-supervised process represents the best way to solidify our financial position and strengthen our balance sheet”, company chairman John Eaves said in a statement.
The development underscored the depths of the downturn in the coal industry. Upon approval by the Bankruptcy Court and satisfaction of customary conditions, these financings, as well as the company’s existing liquidity and cash generated from ongoing operations, will be used to support the business during the restructuring process.
Arch Coal Inc. joined the ranks of bankrupt coal miners as the US continues to shift toward cheaper, cleaner-burning natural gas, threatening the dominance of one of the world’s dirtiest sources of energy. Arch has more than five billion tonnes of metallurgical and thermal coal reserves, mostly in the mid-Appalachian mountain zone of the eastern United States and in Colorado and Wyoming in the West.
At the end of the third quarter of 2015, Arch reported long-term debt of about $5.11 billion, so it appears as though most of its long-term debt will be wiped out. Arch’s plans to open a new mine in Montana have stalled over the past year, and its proposal to build a $400 million railroad service was shelved in late November. Arch has been losing money since 2012.
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Producers accounting for more than 25 percent of US coal are now in bankruptcy, based on 2013 government figures of major USA coal companies’ production.
