Alpha Natural Resources filed for voluntary chapter 11 bankruptcy early Monday morning. As said by the company, normal business operations will continue uninterrupted through the bankruptcy proceedings.
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But the price of metallurgical coal has hit an 11-year low amid an economic slowdown in China, the world’s largest producer of steel.
Alpha, which operates more than 50 coal mines and 20 preparation facilities in Appalachia, has secured up to $600 million in bankruptcy financing, officials told the paper, and the company will look to sell a few of its best-producing mines or turn them over to creditors.
“It will enable us to build on the significant steps we have taken over the past several years to restructure our debt and protect our operations”, Crutchfield said.
Now trading at 3 cents a share, the value drop is spectacular considering that Alpha Natural Resources was in 2008 commanding $104.44 a share.
“I am confident Alpha will emerge from this process as a stronger company, with a diversified resource base and better positioned for the future”.
In addition, in late May, Wyoming environmental regulators informed Alpha that the company no longer qualified for the self-bonding program for mine reclamation costs and had 90 days to provide substitute bonding for slightly more than $400 million of obligations.
Alpha, whose stock has fallen to mere pennies amid the global crash in coal prices, said it hoped to survive what it called “a historically challenged coal market”.
Coal prices have plunged in recent years as utilities have switched increasingly to natural gas, partly because of price, but also because of changing regulations.
Alpha rivals Patriot Coal Corp., Walter Energy Inc. and James River Coal Co., have also sought bankruptcy protection since the start of 2014.
President Barack Obama on Monday is expected to require even steeper greenhouse gas cuts from U.S. power plants.
Reported by Bloomberg authors Jodi Xu Klein and Laura J Keller “according to three people with direct knowledge of the matter“, who remained anonymous, the company is to receive a loan from Citigroup Inc. and Davidson Kempner Capital Management to help fund the company through bankruptcy.
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Alpha also launched www.alpha restructuring.com to information about the bankruptcy process and legal filings.
