The world’s largest coal mining company, which has six mines in Indiana, has filed for Chapter 11 bankruptcy protection. Missouri-based Peabody Energy Corp. (NYSE: BTU) Chief Executive Officer Glenn Kellow says the move comes "amid a historically challenged industry backdrop." The company alluded to the potential filing last month, citing massive debt. The Indiana portfolio includes the Bear Run Mine in Sullivan County, which Peabody says is the largest surface mine in the eastern United States.
Coal prices on the global market have been off for some time. Compounding troubled economic issues is the obligations related to Peabody’s 2011 acquisition of McArthur Coal in Australia, which was valued at $5.2 billion. The Australian operations are not included in the bankruptcy filing. Peabody says all U.S. mines were profitable in 2015.
The company’s filing with the U.S. Securities and Exchange Commission is through the U.S. Bankruptcy Court for the Eastern District of Missouri. It details $800 million in debtor-in-possession financing through a Citigroup-led lender group. The package involves $500 million in senior secured debtor-in-possession term loan facility, $100 million senior secured debtor-in-possession L/C facility and $200 million bonding accommodation facility.
Peabody says operations are expected to "continue in ordinary course of business." The company reported a loss last year totaling more than $2 billion.
It operates six mines in Sullivan, Gibson and Warrick counties, including: eight-ton-capacity Bear Run (located near Carlisle), Francisco Underground, three mines (north, south and central) in the Somerville system in Gibson County and Wild Boar in Lynnville.
The company says bankruptcy will help reposition it for growth. In a statement, Kellow said:
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. Through today’s action, we will seek an in-court solution to Peabody’s substantial debt burden amid a historically challenged industry backdrop. A company like Peabody with safe, efficient operations will be well positioned to serve coal demand that will continue in the United States and around the world. We are a leading producer and reserve holder in our core regions of the Powder River Basin, Illinois Basin and Australia. Peabody has a new management team, outstanding workforce, unmatched asset base and strong underlying operational performance that represent a key driver in the company’s future success.
As is customary with such a filing, the company’s shares on the New York Stock Exchange will not be allowed to be traded.