New financing swings James River Coal to profit in Q2 2013

James River Coal (NASDAQ: JRCC), which produces coal in Central Appalachia and Indiana, said Aug. 9 that it had net income of $52.6m for the second quarter of 2013 and net income of $10.5m for the six months ended June 30, 2013.

Second quarter and the six month results include $101.2m of pre-tax gain related to Private Exchange Transactions. The 2013 results are compared to a net loss of $25.8m for the second quarter of 2012 and a net loss of $41.4m for the six months ended June 30, 2012.

Peter Socha, Chairman and CEO, commented: “Things are still interesting in the coal industry. We continue to be pleased with our mine operations. They are doing an excellent job of managing their people, costs, capital, and assets during a difficult time in the coal industry. The coal markets have continued to be soft. The thermal markets are still weak, but we can see several factors that may lead to improvement later this year and into 2014. The met markets have clearly weakened during the past several months. We are a little more cautious about met than we had been earlier this year. We have started to take definitive action to strengthen our balance sheet and improve our liquidity position during this period of soft coal markets. We have been very encouraged by the input and support that we have received from many parties during this difficult process.”

In May 2013, the company issued $123.3m principal amount of 10.0% Convertible Senior Notes due 2018 (the 10.0% Convertible Senior Notes) in exchange for $90m principal amount of its 4.5% Convertible Senior Notes due 2015 and $153.4m principal amount of its 3.125% Convertible Senior Notes due 2018 (the Private Exchange Transactions). The Private Exchange Transactions resulted in a gain of $101.2m, which includes the write-off of $3.6m of unamortized financing costs.

James Rivers produced 2.1 million tons of company and contractor coal in the second quarter, down from 2.5 million tons in the year-ago quarter. Central Appalachia operations produced 1.5 million tons of that in the second quarter, down from 1.9 million tons a year ago. Indiana mines produced 598,000 tons in the second quarter, down slightly from 607,000 tons a year ago.

As of Aug. 8, the company had 6.5 million tons of Central App coal priced for sale in 2013 at an average of $80.24/ton, with 2.5 million tons committed out of Indiana at $45.04/ton. In 2014, James River has only 300,000 tons of Central App coal committed and priced at an average of $75.75/ton, with 900,000 tons of Indiana coal committed and priced at $47.64/ton. Priced tons in CAPP in 2013 do not include approximately 264,000 tons of met coal that have been sold but not yet priced. The prices for the Midwest are minimum base price amounts adjusted for projected fuel escalators.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.