Leading global coal miner Peabody files for bankruptcy
By Tracy Rucinski and Tom Hals
(Reuters) - Leading global coal producer Peabody Energy Corp (BTU.N: Quote) filed for U.S. bankruptcy protection on Wednesday after a sharp drop in coal prices left it unable to service debt of $10.1 billion, much of it incurred for an expansion into Australia.
The Chapter 11 bankruptcy filing ranks among the largest in the commodities sector since energy and metal prices began to fall in mid-2014 as once fast-growing markets including China and Brazil started to slow.
Peabody, the world's biggest private-sector coal producer, said it expected its mines to continue to operate as usual and said its Australian assets were excluded from the bankruptcy.
Peabody estimated its assets at $11.0 billion and liabilities at $10.1 billion as of the end of 2015, according to court documents.
"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 Chief Executive Officer Glenn Kellow said in a statement.
Peabody has agreed to $800 million in debtor-in-possession financing from both secured and unsecured creditors, subject to court approval, including a $500 million term loan, a $200 million bonding accommodation facility for cleanup costs and a letter of credit worth $100 million, it said.
Large coal companies have been allowed to leave a share of future mine cleanup without collateral through a program called "self bonding" that has come under federal scrutiny following financial distress in the coal sector. Peabody has a total of $1.1 billion in self-bonding across four states, court documents showed.
Unlike most large corporate bankruptcies, Peabody's filing did not sketch out a plan for cutting debt. Continued...