Patriot Coal files for bankruptcy protection again in US

13 May 2015 (Last Updated May 13th, 2015 18:30)

Patriot Coal has filed for bankruptcy protection again in the US Bankruptcy Court of Richmond, Virginia, citing a drop in demand for coal.

Patriot Coal has filed for bankruptcy protection again in the US Bankruptcy Court of Richmond, Virginia, citing a drop in demand for coal.

The company said it is in active negotiations with prospective buyers over sale of its operating assets.

The Wall Street Journal cited sources familiar with the matter as saying that Blackhawk Mining is be among potential buyers.

Patriot Coal is also in talks with key stakeholders over strategic alternatives, to maximise value of its assets.

"The company has been struggling from higher costs as power companies are switching to cheaper natural gas-based processes from coal-fired plants."

The latest move comes after the coal producer came out of bankruptcy in December 2013. Patriot then emerged from bankruptcy with support of hedge fund Knighthead Capital Management.

According to the court petition, Patriot listed assets and liabilities of over $1bn, including $791m in secured debt.

The company has been struggling from higher costs as power companies are switching to cheaper natural gas-based processes from coal-fired plants.

Patriot previously appointed Alvarez & Marsal Holdings, Centerview Partners and Kirkland & Ellis, to assess it on restructuring options.

Patriot Coal president and CEO Bob Bennett said: "In light of the challenging market conditions, and after a comprehensive review of our alternatives, the board and management team have determined that this process represents the best path forward for Patriot and its stakeholders."

A consortium of Patriot's secured debt holders has agreed to provide up to $100m in debtor in possession (DIP) financing, to support the company's continued operations.

The customer shipments and mining operations will continue as usual during the restructuring process, the company said.

With eight active mining complexes in Northern and Central Appalachia, Patriot Coal controls 1.4 billion tonnes of proven and probable coal reserves, and serves domestic and international electricity generators, industrial users and metallurgical coal customers.