Peabody Energy, the largest coal producer in the United States (around 20% of domestic production), has filed petition under Chapter 11 for the majority of its US entities in the US Bankruptcy Court for the Eastern District of Missouri. The company intends to reduce its overall debt level, lower fixed charges and improve operating cash flow while continuing to operate under the protection of the court process. All mines will continue to operate for the duration of the process.
The company had a total debt of US$6.3bn at the end of 2015 and was allowed to exercise a 30-day grace period related to interest payments due on 15 March 2016. Peabody owns stakes in 26 mines in the United States and Australia, with about 3/4 of its production sold to the US power sector, that is increasingly shifting toward gas-fired generation. This trend will aggravate difficulties for coal mining companies, as stricter environmental regulations will be introduced as of 2022. The group is also facing falling coal prices (from around US$200/tonne in 2000, when coal covered half of the US power mix, to the current US$40/tonne, with coal accounting for 1/3 of the power mix).