Coal news and updates

Arch Coal Taps Restructuring Advisers Amid Debt

Arch Coal Inc. has tapped restructuring advisers to explore ways to decrease its multibillion-dollar debt load, according to people familiar with the matter, as a deep coal-market slump continues to weigh on the mining company and its rivals.

The St. Louis company is working with lawyers at Davis Polk & Wardwell LLP and financial advisers at Blackstone Group LP, the people said. Arch isn’t planning a broad restructuring of its debt load through bankruptcy, they added. Instead, it is looking to trim its debt through deals with bondholder groups.

Arch’s effort is the latest sign of how coal companies are contending with a long-term swoon in the industry, which is struggling as power plants switch to less-expensive natural gas and as demand falls for the type of coal used in steelmaking.

The weak market has forced Appalachian minersPatriot Coal Corp. and Xinergy Ltd. to file for chapter 11 bankruptcy protection this year. Another coal producer, Walter Energy Inc., earlier this month said it was discussing recapitalization options with creditors. Murray Energy Corp. is set to announce layoffs of about 21% of its workforce, due to weak pricing for the type of coal burned by power plants, The Wall Street Journal reported Thursday, and Alpha Natural Resources Inc. said Friday it is planning to lay off 439 workers.

Arch is in talks with holders of its bonds due in 2020, according to people familiar with the negotiations. One potential option is to swap the bonds for new, higher-ranking debt, the people said.

The bondholders, advised by investment bank Moelis & Co., include Blackstone’s credit arm, GSO Capital Partners; and hedge fund Hutchin Hill Capital LP, one of the people added. The bonds recently traded at around 32 cents on the dollar, according to MarketAxess.

Arch has $5.1 billion in long-term debt, the legacy of its $3.4 billion acquisition of International Coal Group Inc. in 2011 and a three-year streak of annual losses. As of March 31, it had about $939 million in cash and short-term investments and $179 million in borrowing capacity under its lines of credit, according to a regulatory filing.

The company’s shares fell 4% Friday to close at 66 cents.

source: http://www.wsj.com