Coal news and updates

Peabody shares drop on Patriot Coal exposure

Peabody Energy stock fell 8 percent in the first day of trading since the St. Louis-based coal miner told investors it could be on the hook for tens of millions of dollars in Patriot Coal obligations.

Patriot, spun off from Peabody in 2007, filed for Chapter 11 bankruptcy protection last month, just 18 months after emerging from a prior bankruptcy restructuring.

It plans to sell “substantially all” of its operating assets to a strategic partner. In January, Patriot moved its headquarters from Creve Coeur to West Virginia to be closer to its eight mines in the state.

In a Friday afternoon filing with securities regulators, Peabody said it is secondarily liable for an estimated $150 million of Patriot’s black lung obligations, which are paid as claims and incurred each year.

Peabody also said that as of March 31, it had provided $122 million of credit support to Patriot, including $15 million related to black lung claims.

Patriot also owes Peabody $4.9 million from an unsecured credit agreement and $2 million for retiree health care payments made by Peabody.

Peabody said it “will continue to vigorously defend its rights” regarding the Patriot liabilities.

Patriot’s last bankruptcy caused union protests in the St. Louis area throughout 2013 while Patriot tried to shed retiree health care and pension obligations that were formerly Peabody’s.

The two companies eventually reached an agreement with the mine workers’ union.

Some industry leaders and experts expect a number of coal restructurings as the industry continues to struggle with oversupply, environmental regulations and increased competition from natural gas and renewables.

Shares of Peabody closed at $3.10 Monday, down about 60 percent so far this year.

source: http://www.stltoday.com