St. Louis, MO (KTRS) There’s more bad news for the coal industry.
St. Louis-based Peabody Energy, the nation’s largest coal miner, filed for Chapter 11 bankruptcy protection on Wednesday. The filing comes less than three months after Creve Couer based Arch Coal, the country’s second-largest miner, filed for bankruptcy.
Mines and offices at Peabody, a company founded in 1833 by 24-year-old Francis S. Peabody, will continue to operate as it moves through the bankruptcy process. However, Peabody’s planned sale of its New Mexico and Colorado assets were terminated after the buyer was unable to complete the deal.
New energy technology and tightening environmental regulations have throttled the industry and led to a wave of mine closures and job cuts. Peabody makes most of its money by selling its coal to major utilities that power the nation’s electric grid, but many utilities have shifted to using natural gas, which costs less than coal and produces less pollution.
The financial well-being of Peabody, whose stock has been halved in just the last year, has been in decline since 2011, said James Gellert, CEO of Rapid Ratings International, a New York firm that evaluates default risks.
“This one was pretty obvious to see coming for a while,” Gellert said.
“I think coal’s been under pressure for quite some time and certainly from environmental standpoints as well as overall industry shifts. It’s still a big part of the energy grid but it is a declining portion of it,” Gellert said.
The St. Louis miner has obtained $800 million in debtor-in-possession financing facilities. They include a $500 million term loan, a $200 million bonding accommodation facility and a cash-collateralized $100 million letter of credit facility.