The bankruptcy court for Patriot Coal (OTC: PCXCQ) on Dec. 17 approved the company’s reorganization plan, with the company due to emerge from Chapter 11 protection on Dec. 18.
In July 2012, the company sought Chapter 11 protection, due to a coal market downturn and high legacy labor costs, at a court in New York. The case was later transferred to the U.S. Bankruptcy Court for the Eastern District of Missouri, closer to where many of its unionized employees and retirees are located.
Patriot said it will close on its exit financing, complete related rights offerings and emerge from Chapter 11 reorganization on Dec. 18.
“This marks the final step in Patriot’s financial restructuring,” said Patriot President and CEO Bennett Hatfield. “We look forward to a new beginning as a well-capitalized company providing a competitive product to the electric utility and steel industries.”
Patriot Coal is a producer and marketer of coal in the eastern United States, with 10 active mining complexes in Northern and Central Appalachia (in West Virginia) and the Illinois Basin (western Kentucky). It shut mining operations during the course of the bankruptcy case, but there were no major sales of assets and it is emerging as largely the same company, but with restructured financing and worker costs. It did recently agree to sell some undeveloped coal reserves in western Kentucky to Alliance Resource Partners.
The process of getting out of bankruptcy also included reaching settlements with Peabody Energy and Arch Coal, which formerly owned much of Patriot, and the United Mine Workers of America union.
Patriot Coal sold only 4.7 million tons of coal in the third quarter of this year, down from 6 million tons in the year-ago quarter. The St. Louis-based company also reported in its Nov. 8 quarterly Form 10-Q filing that it sold 16 million tons in the first nine months of 2013, down from 19 million tons in the first nine months of last year. It sells coal to a number of power generators, including Louisville Gas and Electric and Kentucky Utilities.
Patriot has been projecting something of a rebound in coal sales through 2018. Sales figures were in a series of 2013-2018 financial and operational projections that Patriot offered in a plan of reorganization and disclosure statement filed Oct. 9. The coal sales projections for the 2013-2018 period, broken down by metallurgical and thermal coal, are:
- 2013 – 6.7 million tons met, 15.4 million tons thermal, total 22.1 million tons;
- 2014 – 7.8 million tons met, 16.4 million tons thermal, 24.2 million tons total;
- 2015 – 8.5 million tons met, 16.4 million tons thermal, 24.9 million tons total;
- 2016 – 9.2 million tons met, 17 million tons thermal, 26.1 million tons total;
- 2017 – 9.9 million tons met, 16 million tons thermal, 25.9 million tons total; and
- 2018 – 10.1 million tons met, 14.2 million tons thermal, 24.3 million tons total.