US-based Peabody Energy, the world's largest private-sector coal miner, today filed for bankruptcy protection after a slump in global coal prices and recent acquisitions in Australia that left it unable to service its debts.
The move comes barely two months after Arch Coal, the second-biggest US coal miner, filed for bankruptcy.
"This was a difficult decision, but it is the right path forward for Peabody," said, Glenn Kellow, CEO of Peabody in a statement. "This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we've made in recent years and lay the foundation for long-term stability and success in the future."
Peabody, which in 2011 acquired Australia's Macarthur Coal for $4.9 billion, missed a $71 million debt payment, had last month said that it "may need to voluntarily seek protection under Chapter 11 of the US Bankruptcy Code". (See: US coal miner Peabody Energy mulls filing for bankruptcy protection)
Peabody has secured $800 million in debtor-in-possession financing from both secured and unsecured creditors, including a $500-million term loan, $200-million bonding accommodation facility and a letter of credit worth $100 million.
The St Louis-based company, which has total debt of $6.3-billion, listed both assets and liabilities in the range of $10 billion to $50 billion.
The price of metallurgical coal has fallen by about 75 per cent since its 2011 peak and Peabody made a $700 million writedown on its Australian metallurgical coal assets last year.
Peabody said that none of its Australian units are included in the filings, and the Australian operations will continue to operate as usual.
''The factors affecting the global coal industry in recent years have been unprecedented,'' Peabody said in the statement. ''Still, multiple third-party estimates project that both the U.S. and global coal demand will stabilize. Coal currently fuels approximately 40 percent of global electricity and is expected to be an essential source of global electricity generation and steel making for many decades to come,'' the company said in a statement.
Peabody reported a loss of $2 billion last year, up from a $787 million loss the previous year, while revenue fell by 17 per cent to $5.6 billion.
Shares of the 133-year-old company, which had already fallen by 98 per cent in the past two years, tumbled by 45 per cent to just $2.19 last month when it announced that it may file for bankruptcy protection.
US coal miners are currently in the doldrums battling high debts, low energy prices and new US environmental regulations from the Obama administration to cut greenhouse gas emissions from coal-fired power plants.