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Peabody, world's top private coal miner, files for bankruptcy
[NEW YORK] Peabody Energy Corp, the world's largest privately owned coal producer, filed for US bankruptcy protection on Wednesday in the wake of a sharp fall in coal prices that left it unable to service a recent debt-fueled expansion into Australia.
The company listed both assets and liabilities in the range of US$10 billion to US$50 billion, according to a court filing. Peabody's Chapter 11 bankruptcy filing ranks among the largest in the commodities sector since energy and metals prices began to fall in the middle of 2014 as once fast-growing markets such as China and Brazil began to slow.
"This was a difficult decision, but it is the right path forward for Peabody," chief executive officer Glenn Kellow said 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 has secured US$800 million in debtor-in-possession financing from both secured and unsecured creditors, including a US$500 million term loan, US$200 million bonding accommodation facility and a letter of credit worth US$100 million, the company said in release.
Peabody's debt troubles date back to its US$5.1 billion leveraged buyout of Australia's Macarthur in 2011, a coveted asset at the time meant to position it as a supplier of metallurgical coal for Asian steel mills.
But as demand for metallurgical coal fell, particularly in China, Peabody's financial woes intensified. It made a US$700 million writedown on its Australian metallurgical coal assets last year.
Producers accounting for about 45 per cent of US coal output have filed for bankruptcy in the current industry downturn, based on 2014 government figures.