ST. LOUIS (CN) - Tough times for the U.S. coal industry continued this week, as Arch Coal became the largest domestic product to file for bankruptcy, seeking to trim $4.5 billion in debt.
Companies responsible for more than a quarter of U.S. coal production are in bankruptcy as the industry adjusts to prices that have fallen by 50 percent since 2011, competition from cleaner-burning natural gas and new environmental rules.
Arch Coal is restructuring under Chapter 11. The company said on its website: "The court-supervised process will allow us to continue to operate in the ordinary course. We fully expect to continue to pay our employees, suppliers and vendors."
Arch's senior lenders are slated to get a combination of cash, new senior debt and most of the reorganized company's stock, according to a term sheet outlining the proposed bankruptcy workout plan, according to the Wall Street Journal. Junior creditors can choose between a minority slice of equity or the value of Arch assets that aren't pledged as collateral for senior loans.
The United States gets 34 percent of its energy from coal, and is expected reduce it only to around 30 percent by 2030, according to the Energy Information Administration.
Bankruptcies affect corporate structure, not the coal mines the companies operate. The survivors will be low-cost producers across the country, including most of the 11 mines in Arch's portfolio, according to The Wall Street Journal.
The biggest creditor listed on Arch's bankruptcy filing is UMB Bank, which is owed about $2.9 billion in unsecured debt.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.
Additional Reads
-
In reversal, US poised to approve Abrams tanks for Ukraine January 24, 2023 -
-
Size, scope of FTX failure gets clearer as users fear worst November 15, 2022 -
