Alpha Natural files for Chapter 11 bankruptcy protection

Alpha Natural Resources filed for voluntary chapter 11 bankruptcy early Monday morning.

“I’m confident Alpha will emerge from this process as a stronger company with a diversified resource base and better position for the future”, said Crutchfield.

Now trading at 3 cents a share, the value drop is spectacular considering that Alpha Natural Resources was in 2008 commanding $104.44 a share. It is Alpha Natural Resources’ belief that Chapter 11 “will enable them to continue to restructure their operations and debt structure while riding out the storm that has beset the coal industry”, Philip Cavatoni, chief financial and strategy officer at Alpha Natural Resources, said in a bankruptcy filing on Monday.

In court filings, the company said it has $1.96 billion in secured debt, including $714 million in second-lien bonds and a $611 million term loan.

Alpha, a major metallurgical coal producer with more than 50 underground and surface mines and more than 20 coal preparation facilities in West Virginia, Virginia, Kentucky, Pennsylvania and Wyoming, has been issuing WARN notices to hundreds of employees throughout the summer.

In a statement, Alpha blamed a handful of factors for the “unprecedented period of distress” for the industry, including cheap natural gas prices, a bloated coal market, low prices and increased government regulations that have encouraged electric utilities to move away from coal.

President Barack Obama on Monday will announce the first ever set of rules limiting greenhouse gas emissions from existing power plants, a move that will likely reduce demand for coal even further. See Fitch Wire: “Tighter Self-Bonding Would Hit Distressed US Coal”, dated June 19, 2015 for additional information.

“The change and challenges the U.S. coal industry has experienced over the last several years are greater than any in the past three decades”, Crutchfield said.

Rivals Patriot Coal Corp., Walter Energy Inc. and James River Coal Co., have already sought bankruptcy protection. “There is no doubt more uncertainty ahead, but also transformational opportunity in the coal sector for those who make proactive, strategic decisions”.

The filing was made in U.S. Bankruptcy Court in Richmond, Va., which is near its Bristol, Va., headquarters.

The company’s current management team is expected to stay in place through the process.