Restructured Arch Coal emerges from bankruptcy protection

St. Louis-based Arch Coal, one of the nation’s largest coal producers, announced Oct. 5 that it has successfully completed its financial restructuring and emerged from court protection, with new equity that will trade on the New York Stock Exchange under the ticker symbol “ARCH.” 

“Today marks the beginning of a new era for Arch Coal,” said John W. Eaves, Arch’s chief executive officer. “We are extremely pleased with what we have accomplished during our highly expeditious restructuring process, and are eager to move forward with our compelling plan for value creation. I am confident we have all the pieces in place for long-term success – an extraordinary workforce, cost-competitive assets, a high-quality reserve base, a clean balance sheet and an excellent management team.”

Arch emerges as the leading producer of metallurgical coal and the second largest producer of thermal coal in the United States, with a streamlined portfolio of large, modern, low-cost mines. Arch said its operations have a proven track record of generating cash through all phases of the market cycle, with significant upside in rising price environments.

Notable is that the top U.S. coal producer, Peabody Energy, is still in Chapter 11 bankruptcy protection. Another leading U.S. coal producer, Alpha Natural Resources, earlier this year was basically splt in two among different creditor groups while in bankruptcy.

Arch is emerging with more than $300 million of cash on its balance sheet and a debt level of just $363 million, consisting of a new term loan and capital leases. The company’s total debt is just 7% of what it was prior to Chapter 11 restructuring. Cash requirements are expected to be modest, with projected capital spending of $55 million in 2017 and projected debt service of approximately $33 million. In addition, the company has third-party surety bonds in place covering 100% of its mine reclamation bonding requirements. 

“We are particularly pleased to be emerging in a resurgent metallurgical market, and look forward to similar strengthening in thermal coal markets in the months ahead,” Eaves said. “With our enhanced financial foundation and top-tier assets, we believe we are exceptionally well-positioned to capitalize on both.”  

U.S.-based Arch Coal is a top coal producer for the global steel and power generation industries, reliably serving customers worldwide. Its network of large-scale, low-cost mining complexes and high-quality metallurgical and thermal reserves are located in the most strategic coal supply basins in the United States.

It has reported 19.5 million tons of coal sales in the second quarter of this year, down sharply from 30.6 million tons in the year-ago quarter. Its coal sales in the first half of this year came to 39.6 million tons, against 63.7 million tons in the first half of 2015. By far its biggest producer is the Black Thunder mine in the Powder River Basin of Wyoming, which is the second-largest U.S. coal mine.

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.