Alpha Natural Resources files for Chapter 11 bankruptcy protection
Bristol-based Alpha Natural Resources Inc., one the nation’s largest coal companies, has filed for Chapter 11 bankruptcy court protection, citing low coal prices, competition from natural gas and increasing government regulations as causes.
Alpha said voluntary petitions filed by it and some of its subsidiaries will allow the company to reorganize and emerge as a financially viable business.
The Associated Press reported that Alpha is the fourth major coal company in the U.S. to file for bankruptcy in the past 15 months. The list includes Richmond-based James River Coal.
Prices for metallurgical coal, which is used in making steel, have fallen 72 percent since 2011. In addition, many electrical utilities have retired coal-fired power plants because of an abundance of low-priced natural gas and growing pressure from the Environmental Protection Agency to lower carbon emissions.
The Obama administration was scheduled to release on Monday a final draft of its Clean Power Plan setting standards to reduce carbon dioxide emissions by 32 percent from 2005 levels by 2030.
Alpha operates more than 50 mines and more than 20 coal preparation facilities in Virginia, Kentucky, West Virginia, Pennsylvania and Wyoming.
The company’s stock was delisted by the New York Stock Exchange last month and now trades over the counter. The stock had been trading for less than $1 for months.
Alpha filed its Chapter 11 petition in U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond. The company expects normal business operations to continue uninterrupted.
In its bankruptcy filing, the company listed total assets of $10.1 billion and total debts of $7.1 billion. The biggest single claim was $584.9 million in 6.25 percent senior notes due 2021 held by San Francisco-based Union Bank .
“While a difficult decision, this voluntary Chapter 11 filing is the right strategy at the right time for the future of our business,” Alpha's Chairman and CEO Kevin Crutchfield said in a statement. “It will enable us to build on the significant steps we have taken over the past several years to restructure our debt and protect our operations. I am confident Alpha will emerge from this process as a stronger company, with a diversified resource base and better positioned for the future.”
Alpha said that the U.S. coal industry is in an “unprecedented period of distress.”
“The change and challenges the U.S. coal industry has experienced over the last several years are greater than any in the past three decades,” Crutchfield said. “There is no doubt more uncertainty ahead, but also transformational opportunity in the coal sector for those who make proactive, strategic decisions.”
The company has secured an 18-month debtor-in-possession (DIP) financing package of up to $692 million, arranged by Citigroup and led by a group of first- and second-lien lenders.