With Peabody's recent but expected bankruptcy filing, many continue to question the state and future of US coal. Our analysts examine the implications of the filing both for Peabody and for the coal market.
After much speculation in the market, Peabody Energy filed for Chapter 11 bankruptcy on 13 April with a debt burden of US$6.3 billion.
Driven largely by the company's acquisition of Macarthur Coal in 2011 and made even more likely by the low-price commodities market and the collapse of Peabody's attempted sale of its New Mexico and Colorado assets, the filing comes with little surprise.
However, our analysis demonstrates that the company's US assets remain in a positive cash margin position for several years to come. Despite a low-price market, a renegotiation of Peabody's debt could create a leaner, stronger company poised for a dominant position in the coal industry.
Adding Peabody to the company of Arch Coal, Alpha Natural Resources, Walter Energy, Patriot and James River — all of whom have filed large-scale bankruptcies — 45% of total US coal production is now supplied by companies who have filed under Chapter 11.
Our Insight report Peabody Energy files for Chapter 11 bankruptcy examines the implications of the filing for the company and for the metallurgical coal industry. You may purchase it on demand via woodmac.com or as part of a subscription service.
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