U.S. energy giant Peabody filed for Chapter 11 bankruptcy on Wednesday, April 13. A sharp plunge of coal price made the company had to declare that it was unable to pay its $10.1 billion debt.
On Wednesday, Peabody Energy filed a regulatory filing seeking for bankruptcy protection. A sharp plunge of coal price and declining purchase from countries which were once a fast-growing markets, such as Brazil and China, had driven the filing. Reuters reported the Peabody's bankruptcy filing ranked among the largest in the commodities sector since the energy and metal prices started to drop in mid-2014.
Peabody Energy is the largest private-sector coal company in the world with more than 100-years of experience in mining industry. Since 1962, the company expanded its operation to Australia and its Australian coal mine had been one of its major operation worldwide. In 2011, Peabody acquired Australian mining company the Macarthur Coal Ltd. for $5.1 billion to widen its reach in the continent.
Wall Street Journal reported that Peabody filed its bankruptcy for most of its U.S. entities in the bankruptcy court for the Eastern District of Missouri. However, none of its Australian mining operations is included in the bankruptcy.
In the filings, Peabody stated its estimated assets at $11.0 billion with $10.1 billion liabilities as of the end of 2015. The company expected the bankruptcy protection will strengthen its financial structure, as CEO Glenn Kellow said in a statement.
"This was a difficult decision, but it is the right path forward for Peabody. We begin today to build a highly successful global leader for tomorrow," he said. "Through today's action, we will seek an in-court solution to Peabody's substantial debt burden amid a historically challenged industry backdrop. This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we've made in recent years and lay the foundation for long-term stability and success in the future."
The St. Louis-based company will continue to operate its mines and offices and those premises are expected to keep operating during the process. The company filed the bankruptcy declaring unable to pay its $10.1 billion debt which was acquired to finance its expansion in Australia.
According to PR Newswire, Peabody has also obtained $800 million in debtor-in-possession financing from secured and unsecured creditors. That includes $500 million term loan, a $200 million bonding accommodation facility for cleanup costs and a $100 million letter of credit. The financing are subjects to court approval and limitations.
