Peabody Energy may file bankruptcy protection amidst weak coal demand

16 March 2016 (Last Updated March 16th, 2016 18:30)

US-based coal producer Peabody Energy said in a regulatory filing that the company may have to seek bankruptcy protection citing weak economies and its struggle to keep up with its debt payments.

Peabody Energy

US-based coal producer Peabody Energy said in a regulatory filing that the company may have to seek bankruptcy protection citing weak economies and its struggle to keep up with its debt payments.

The company flagged the possibility of bankruptcy in the filing with the US Securities and Exchange Commission and said it will skip $71.1m in interest payments.

Peabody Energy said in a statement: "Peabody Energy has now filed its Form 10-K annual report, which includes an opinion from our independent auditors concluding that our current financial path, absent significant improvements, asset sales and / or other favorable changes, may not be sustainable over the course of the year.

"One practical effect is that this opinion impacts our credit agreement and may result in an acceleration of our debt obligations."

The company cited stagnating economic growth in major coal importers, as well as the potential for additional regulatory requirements that have been enforced on producers.

"The company cited stagnating economic growth in major coal importers, as well as the potential for additional regulatory requirements that have been enforced on producers."

On 31 December 2015, the company had about 7,600 employees worldwide, including approximately 5,700 hourly employees; the employee amounts exclude those that were employed at operations classified as discontinued operations.

According to analysts, Peabody is in the process of reducing its debt payments by trying to negotiate a deal with its creditors but in vain.

The company owns interests in 26 coal mining operations in the US and Australia and holds a majority interest in 25 of those mining operations and a 50% equity interest in the Middlemount mine in Australia.

As of 11 March 2016, Peabody reported about $900m of available liquidity and at the end of 2015, it had a total debt of $6.3bn.


Image: Peabody has a platform of surface and underground mines across the US and Australia. Photo: courtesy of Peabody Energy, Inc.