Coal company Alpha Natural Resources files for bankruptcy protection

3 August 2015 (Last Updated August 3rd, 2015 18:30)

US-based coal producer Alpha Natural Resources has filed for chapter 11 as part of a plan to cut its $4bn debt.

US-based coal producer Alpha Natural Resources has filed for chapter 11 as part of a plan to cut its $4bn debt.

The company and some of its wholly owned subsidiaries have filed voluntary petitions with the US Bankruptcy Court for the Eastern District of Virginia in Richmond.

According to Alpha, the relief provided by Chapter 11 will allow it to reorganise and position itself as a financially viable business to compete in dynamic energy markets.

"The change and challenges the US coal industry has experienced over the last several years are greater than any in the past three decades."

Alpha Natural Resources chairman and CEO Kevin Crutchfield said: "While a difficult decision, this voluntary chapter 11 filing is the right strategy at the right time for the future of our business.

"It will enable us to build on the significant steps we have taken over the past several years to restructure our debt and protect our operations."

The Bankruptcy Court, which the company will seek the necessary relief from, will allow normal business operations to continue uninterrupted.

According to Crutchfield, coal industry in the US is in a distress period due to increased competition from natural gas, and low demand for the commodity.

The distress is also due to an oversupply in the global coal market, low prices due to weaker international and domestic economies, in addition to increasing regulations by the government.

Crutchfield added: "The change and challenges the US coal industry has experienced over the last several years are greater than any in the past three decades."

Citigroup provided an 18-month debtor-in-possession financing package amounting to around $692m to the company.

The package will provide operational flexibility to Alpha to reorganise successfully and enter the process with the necessary liquidity to support its operations that are progressing.