Peabody Officially Files for Bankruptcy Protection
Peabody Energy officially filed for Chapter 11 bankruptcy on Wednesday due to a sharp decline in coal prices leaving it unable to cater a recent debt-fueled expansion into Australia. The case was filed in the U.S. Bankruptcy Court for the Eastern District of Missouri, St. Louis, with case number 16-42529.
According to Reuters, the company's listed assets and liabilities range from $10 billion to $50 billion based on the court filing. Peabody's bankruptcy filing stands among the biggest in the commodities sector since energy and metal prices started to plunge in the mid-2014 as once fast-growing markets like Braxil and China starts to slow.
"This was a difficult decision, but it is the right path forward for Peabody," Chief Executive Officer Glenn Kellow said in a statement. "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."
All of Peabody's mines and offices will keep on operating in the common course of business and are expected to continue doing so for the duration of the process. It was founded in 1883 by Francis S. Peabody, who was only 24 years old at that time with a wagon, two mules and a $100 in his pocket. He became a miner who owns the biggest private-sector coal company in the world having clients in 25 countries with 8,000 employees according to its website, based on a Bloomberg report.
Metallurgical coal's price has stumbled almost 75% since its peak in 2011 which hurt Peabody which spent $4 billion to acquire Australia's MacArthur Coal Ltd. for the steelmaking component sale expansion.
As cited by The Wall Street Journal, the coal producer said it will no longer sell assets in New Mexico and Colorado after the prospective buyer was not able to complete the deal. Being part of the process, Peabody received $800 million in debtor-in-possession funding facilities organized by Citigroup.
This bankruptcy filing by Peabody Energy Corp. is the latest in the row of bankruptcies filed by other American coal producers including Alpha Natural Resources Inc., Arch Coal Inc., Patriot Coal Corp. and Walter Energy, Inc.