Arch Coal has received approval from the US Bankruptcy Court for the Eastern District of Missouri for its First Day motions related to its Chapter 11 restructuring. The company, which is one of the largest coal producers in the US, announced it was filing for Chapter 11 bankruptcy earlier this month as part of an agreement with creditors to restructure its large debt load.
“These approvals represent a positive step forward in our financial restructuring process,” said Arch’s Chairman and CEO, John Eaves, in a press statement. The approvals will allow the company to continue normal business operations as it implements its financial restructuring.
Among the motions approved, the court signed off on US$275 million of debtor-in-possession financing Arch expects to receive from the ad-hoc group of lenders with which it has agreed a debt restructuring plan. The company also received approval to continue to pay wages, salaries, benefits and certain other employee benefits.
“We will continue providing our customers exceptional services as we move through this process and we will continue to operate safely, responsibly and efficiently,” concluded Eaves.
The agreement with a majority of lenders under its US$1.9 billion first lien financing facility will eliminate more than US$4.5 billion of debt from Arch’s balance sheet – much of which comes from the acquisition of International Coal Group (ICG) at the peak of the market in 2011. The acquisitions of ICG also increased Arch’s exposure to thermal coal production Appalachia, the region that has been most impacted by the downturn in the US coal sector.
Prices for Central Appalachian coal fell 13% in 2015, the fifth consecutive annual decline on the New York Mercantile Exchange. Arch Coal is the second-largest thermal coal producer in the US behind Peabody Energy, which does not mine in Appalachia. The third-largest producer, Alpha Natural Resources, went into bankruptcy last year.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/14012016/bankruptcy-court-approves-archs-first-day-motions-2016-50/