Coal news and updates

Arch Coal shares tumble following report of restructuring talks

Arch Coal shares tumbled 12 percent Tuesday after reports that the Creve Coeur-based miner was meeting with restructuring advisers to manage its large debt load amid the drawn-out slump in coal prices.

Citing anonymous sources, The Wall Street Journal reported Friday that Arch was working with lawyers at Davis Polk & Wardwell LLP and financial advisers at Blackstone Group LP.

The Journal report said Arch wasn’t looking at bankruptcy but is instead trying to cut deals with groups holding some of its $5.1 billion in debt.

According to the report, Arch was talking with holders of a $500 million bond due in 2020.

The report came after markets closed for the Memorial Day weekend, when Arch shares closed at 66 cents. Prices fell 8 cents Tuesday to close at 58 cents.

The drop in its share price also came after the company disclosed Friday that its stock value had fallen below the New York Stock Exchange’s threshold for listing. The company now has to come up with a plan to boost its 30-day-average trading value to at least $1.

Arch and other coal producers have struggled recently. In the last three months, Arch shares have dropped 56 percent while shares of St. Louis Peabody Energy are down 57 percent.

Arch, the second-largest U.S. coal company by volume, employs about 200 people at its St. Louis-area headquarters.

The coal miner faces approaching maturities for a large portion of its debt, but coal markets remain depressed as domestic utilities move to cheaper natural gas and renewable energy. Meanwhile, international prices are down amid a glut of supply and lower imports from big consumers like China.

An Arch loan for $1.9 billion comes due in 2018, while $1.7 billion in bonds mature in 2019. One of those, a $1 billion bond, was trading at 19 cents on the dollar.

Arch used about $2.5 billion in debt to finance its 2011 acquisition of International Coal Group for $3.4 billion, when steel-making coal was worth triple what it is today and other coal demand was stronger.

Debt analysts had previously said Arch needed a coal price rebound this year or early next year to be able to refinance its debt and avoid running out of cash.

An Arch spokeswoman declined to comment on “market rumors or speculation.”

source: www.stltoday.com