Another One Bites The Coal Dust - Alpha Natural Files For Bankruptcy

Tyler Durden's picture

Amid the collapse in coal prices, not helped by the 'China situation' and President Obama's nudge, WSJ reports that the ailing US coal just got another black eye as Alpha Natural Resources is expected to file for chapter 11 bankruptcy protection early Monday to cut its more than $3 billion debt load. After four straight annual losses, Alpha - one of America's largest coal producers - has secured $692mm in DIP financing as it prepares its restructuring plan expected to sell some of the best mines and shutter others. It appears the Arch Coal's CEO's ominous words last week were prophetic - “Coal markets are as difficult as I’ve seen them during my 30 years in the industry."

From bad to worse...

On top of Australia's mining industry collapse... Now, the US industry's plunge is gathering pace, as The Wall Street Journal reports,

Alpha Natural Resources Inc. is expected to file for chapter 11 bankruptcy protection early Monday to cut its more than $3 billion debt load, according to people familiar with the matter, as a severe slump in coal prices continues to wreak havoc on the industry.

 

The Bristol, Va., company, one of the largest U.S. coal producers, hasn’t completed the terms of a restructuring plan but will likely sell some of its best mines or turn them over to creditors and close others during its trip through bankruptcy court, the people said.

 

Alpha has secured as much as $600 million in bankruptcy financing from senior lenders and secured bondholders to fund its operations during its chapter 11 case, some of the people said.

 

A steep drop in coal prices has Alpha and its rivals bleeding cash and choking on debt taken on to finance acquisitions around the start of the decade, when the industry’s outlook was rosier. In 2011, Alpha paid $7.1 billion for rival mining company Massey Energy Inc., a deal that extended Alpha’s lead as the largest miner of the type of coal used in steelmaking.

 

ut the price of metallurgical coal has hit an 11-year low amid an economic slowdown in China, the world’s largest producer of steel. Thermal-coal prices have also plummeted as power plants switch to abundant and relatively clean-burning natural gas.

 

The slump has a number of coal companies at risk. Walter Energy Inc. filed for bankruptcy protection last month with a plan to hand control of the company to senior creditors, after chapter 11 filings by Patriot Coal Corp. and Xinergy Ltd. earlier this year. Arch Coal Inc., meanwhile, is working with bankers and lawyers who specialize in helping struggling companies, The Wall Street Journal has reported, and is facing lender pushback on a proposed debt-for-debt exchange meant to reduce its borrowings and interest costs.

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But but but low commodity prices are unequivocally good for America right?

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Haus-Targaryen's picture

Worth a few minutes --

https://www.youtube.com/watch?v=dYqAfpeH2PI&app=desktop

There are some Socialist bullshit talking points therein, ignore those & its spot on.  

DOT's picture

“Under my plan … electricity rates would necessarily skyrocket.”

Chupacabra-322's picture

"Under my plan...Healthcare rates would necessarily skyrocket."

dontgoforit's picture

Put a little Greece on it and it will work out ok.

kralizec's picture

I'm still waiting to see "Wyatt's Torch".

Panic Mode's picture

Many more bankruptcy to come. Next is the mining and small to medium size oil companies, then the central banks have to come in to print massive load to stop the market crash.

dontgoforit's picture

The NEU-World Order about to bust a move.

Dubaibanker's picture

More bankruptcies are already here, just not being told....to the whole wide world....

31 Jul 2015: Nigeria: Oil.

Oil producer Afren to be put under administration

30 July : USD: Movies

Relativity Media Files for Bankruptcy Protection, Hoping to Sell Itself

27 July 2015: Indonesia: Coal.

Creditor starts bankruptcy proceedings against Indonesia's Berau 

15 July 2015: USA: Coal

Coal miner Walter Energy files for bankruptcy 

 15 July 2015: USA: Oil

 

Sabine sixth U.S. producer to seek bankruptcy protection this year

During July 2015: Kurdistan/Iraq: Gold 

 Kurdish gold prices sink to 4-year low as retailers go bankrupt 

31 July 2015: India: Cement/Infra

Only ten fold rise in bad debts in the last decade for companies that have double the debt as compared to equity.

India Debt Fears Rise Amid High-Profile Defaults

 

Goldman spotlights India debt risk amid high-profile defaults 

25 July 2015: India:

 The next biggest default in India is just round the corner that has the potential to freeze the banking system. It is JUST USD 15.6 billion!

Jaiprakash Associates’ debt rating cut to default

 

8 July 2015: Another retailer in canada went bankrupt as the Loonie competes with the currency Down under to see who goes down faster!

Nine West store owner in Canada files for bankruptcy protection

21 July 2015: USA: Retail

Grocery chain A&P just filed for bankruptcy -- again
Panic Mode's picture

Many more bankruptcy to come. Next is the mining and small to medium size oil companies, then the central banks have to come in to print massive load to stop the market crash.

847328_3527's picture

Too-many-to-count Bankruptcies = Barry's legacy.

dontgoforit's picture

The Soros POS (Plan of Sorrow).  Carried out by the water boy.  Who wuda' thunk it?  We all be fuked.

Catullus's picture

Quick, Obama. Jump on EPA regulations for already planned shut downs of coal plants so that you can't take credit for cleaning up the industry. Don't let anyone think they shutdown because they were already money losers.

LawsofPhysics's picture

Winter is coming...

TideFighter's picture

"Winter" is capitalized no mattter where used: "The coming of Winter...." 

Ms No's picture

It's going to be awesome when the NG decline rates kick in.  Everybody be sure to convert to NG.

Atomizer's picture
California Has a Plan to End the Auto Industry as We Know It.  http://www.bloomberg.com/news/articles/2015-08-03/california-regulator-m...

It will tough to charge electric cars without a coal based infrastructure. 

ZD1's picture

Mary Nichols. She’s the rich leftist hypocrite who has run the California Air Resources Board since 2007. After graduating from Yale, she went to work for the Center for Law in the Public Interest where she became the air pollution specialist. She became involved in some of the first cases regarding the just-passed federal Clean Air Act before segueing to government work.

Governor Schwarzenegger appointed her chairman of the Air Resources Board in 2007 and Governor Brown re-appointed her on January 5, 2011, but in the interim Nichols received heavy criticism for her stock holdings. Her investments included shares in Chevron, Royal Dutch Shell, BP PLC, a Bermuda shipping company that transports crude oil and the world's largest coal company, Peabody Energy Corp, according to the Associated Press. "Five of the investments, including the Chevron stock, are worth as much as $1 million, according to a financial disclosure report Nichols filed recently with the state Fair Political Practices Commission."

After the news media reported Nichols’ stock holdings, she announced that she would put her oil stocks in a trust.

 

http://www.allgov.com/usa/ca/news/appointments-and-resignations/air_reso...

Rainman's picture

Maybe the United Mine Workers should give even moar millions to the Demoncrats for even moar crap and tax . Idiots !

Atomizer's picture

Watch a forced fed mandate for natural gas and exploding fuel cell automobiles. 

847328_3527's picture
Declines in gasoline demand could further disrupt Houston's economy

http://www.bizjournals.com/houston/morning_call/2015/07/declines-in-gaso...

 

Tall Tom's picture

Easy to fix. Close Oil Refineries like they do in California. RESTRICT SUPPLY. Prices will increase as a result.

 

We are paying near $4.00/gallon in San Diego.

 

Then there are less costs for employment compensation combined with an increase in prices for Gasoline.

 

That is a short term win-win for the Oil Companies. They will still realize their targeted profit. You are not going to realize any gains out of this. About that you can be certain.

 

And nobody will ever file an Anti Trust suit or expect that the current President's Department of Injustice will do anything about it. Obama, like his predecessor, is owned by the Oil Corporations.

 

Then you wonder why the Coal Mines are closed down? Come on...They need to rid themselves of unwanted competition.

 

It does not take a great mnd to see the underlying strategy. Hell I do not have one. That is apparent.

ZD1's picture

"We are paying near $4.00/gallon in San Diego."

 

You forgot to mention that Californians pay the highest gas taxes in the country at 60.75 cents per gallon.  Since January 1, Californians also pay a global warming fee on top of gas taxes as part of the Democrat's Cap and Trade Program. Since this hidden gas tax went into effect on Jan. 1, it has generated more than $1 billion for a greenhouse gas reduction slush fund for bureaucrats’ untested, unproven projects and resulted in a 13-cent-a-gallon increase in gas prices. The nonpartisan Legistlative Analyst Office estimates that the program will likely add 13 to 20 cents per gallon by 2020, though the price hike could top 50 cents. Others say it could be as much as 76 cents.

 

http://www.sacbee.com/opinion/op-ed/soapbox/article19360350.html

ZD1's picture

You also forgot to mention that California's Air Resources Board has regulations that require custom "cleaner" blends of gasoline that other states don't have in their fuel distribution. California is a “fuel island” and has no pipelines linking it to petroleum or crude oil supplies, but instead must import an increasing share of fuel from shrinking domestic and distant international sources. The state’s refining capacity has stagnated for decades despite a rapidly growing demand for gasoline. California’s “differentiated” fuel standards cause a continual risk of “supply outages”.

Because the custom "cleaner" blends of gasoline are sold only in California, the state has become a separate market for gasoline. More than ever, California gas prices are determined by how much gasoline is made there and how much Californians want to buy.

 

http://www.sgvtribune.com/business/20150216/why-california-gas-prices-ar...

Tall Tom's picture

Really?

 

And what are the causes of these "fires"? Arson perchance?

 

http://usnews.nbcnews.com/_news/2012/08/06/13151315-fire-shuts-down-major-chevron-oil-refinery-in-northern-calif?lite

 

http://www.latimes.com/local/lanow/la-me-ln-portion-of-refinery-ordered-to-shut-down-20150219-story.html

http://news.yahoo.com/explosion-rocks-southern-california-oil-refinery-090041621.html;_ylt=A0SO80HalL9VDbcAzRxXNyoA;_ylu=X3oDMTEybjd2a2oxBGNvbG8DZ3ExBHBvcwM4BHZ0aWQDQjA0NzVfMQRzZWMDc3I-

 

Yeah. It was shut down for UNPLANNED MAINTENANCE before the fire.

 

Of course the strikes had nothing to do with operations at the refineries in California and elsewhere...

 

http://www.reuters.com/article/2015/02/08/us-refineries-labor-strike-idUSKBN0LC00K20150208

 

Just a run of "Bad Luck", right?

 

Look. You can be a troll for all that I care. I know that you must maintain a Corporate Image. I know that your Public Relations people TROLL these websites and post in attempt, vainly, to contain the damage.

 

But, and I know that you probably do not believe in God, but in the minor chance that yu do, WHEN YOU CONTINUE TO PROMOTE LIES...ESPECIALLY FOR A PAYCHECK...that you have NO HOPE FOR ETERNAL SALVATION as Hebrews Chapter 10, Verse 26, is quite clear about that...

 

It states, "If we deliberately keep on sinning, after we have received the knowledge of the truth, no sacrifice for sins is left but only a fearful expectation of judgment and of raging fire that will consume the enemies of God."

 

So will you trade yur soul, to Satan, for a paycheck now?

 

If you do believe in God then you are possibly called...BUT YOU ARE NOT CHOSEN, as you already have made that trade. And that is some pretty sad shoes to be standing in when the Day of Judgment happens.

 

Good day. And may God bless you.

 

 

ZD1's picture

Really?

Look, you can try to blame me and incorrectly label me as a corporatist for explaining to you why there are more reasons than those evil oil companies as to why gas prices are higher in California than any other state.

Admit it, California is a fucked up one-party state with high taxes and oppressive regulations.

It's not your fault that you're a typical clueless uninformed SoCal dolt who is mostly focused on important stuff like the Kardashians.

Now go pay some moar taxes so that California's hordes of illegal dreamers can get their free college tuition.

Dr. Engali's picture

This is one promise El Presidente has kept, well this one and the other one about fundamentally transforming America. He just failed to say what America would look like when he was done. Third world shithole comes to mind.

Atomizer's picture

Oxygen / Hyrogen mixture. This reminds me of the Ford Pinto plot unfolding.  

Hydrogen Explosion! http://m.youtube.com/watch?v=drrK3ETymwc
firstdivision's picture

Sooo they're turning over the mines to banks...errr senior creditors. 

Atomizer's picture

This why Google is working on self driving cars. They fear the amount of liability. 

 

Paracelsus's picture

Someone has some toxic hedge positions on this that are starting to smoke....

Ms No's picture

Is Alpha going to be sold for a dollar too?  Who's buying?

Kickaha's picture

Yawn.  Coal will remain where it is, ready for use if and when somebody can figure out how to do so and make a profit.  Making a profit will first involve a complete reset of the labor costs, something that has happened already to countless other industries, large and small.

The Big Reset just about everybody here is expecting, and the collapse of the debt house of cards will trigger bankruptcies throughout corporate America.  Alpha Natural is just avoiding the bottleneck that will ensue with bloated BK court dockets and a huge shortage of competent corporate bankruptcy attorneys, who already charge abnormally high hourly fees in the present relatively calm conditions.  Besides, filing now means that DIP financing can be found.  After the Big Reset, that probably won't be the case, and Chapter 7 will be the only option.  In Chapter 11 you can slip through the process and keep your managerial position and ridiculous pay packages despite having guided your corp. downwards into bankruptcy, wiping out the equity shareholders.  In Chapter 7, you are fucked and unemployed.

Wahooo's picture

At this rate there will be no coal available for stockings this Christmas.