Patriot Coal files for Chapter 11 -- again
CHARLESTON, W.Va. - Patriot Coal filed for Chapter 11 bankruptcy protection Tuesday for the second time in three years and said it is involved in active negotiations for the sale of the company.
The company made the filing in U.S. Bankruptcy Court for the Eastern District of Virginia. It had emerged from an earlier bankruptcy case in December 2013 in Missouri.
Patriot said it will continue shipping and mining operations and it has received a commitment for $100 million in debt financing from secured debt holders that it did not identify. It did not specify potential buyers for the company.
The bankruptcy filing lists both the company's estimated assets and liabilities at more than $1 billion.
"In light of the challenging market conditions, and after a comprehensive review of our alternatives, the board and management team have determined that this process represents the best path forward for Patriot and its stakeholders," Patriot President and Chief Executive Officer Bob Bennett said in a statement.
Bennett, who previously was the company's senior vice president and chief marketing officer, assumed his new roles last month after Bennett K. Hatfield resigned, while Patriot Executive Vice President Michael D. Day also added the title of chief operating officer.
Coal-mining companies in central Appalachia have struggled in recent years, shedding jobs amid low natural gas prices, dwindling coal seams, competition from other states and weaker market conditions. U.S. utilities and other companies have been switching to cheap natural gas from coal to generate electricity.
Patriot was formed as a spinoff from the Appalachian operations of former corporate parent Peabody Energy (BTU) in 2007. Patriot has eight active mining complexes in West Virginia and employs about 2,900 people, most of them nonunion.
In December Patriot announced it was permanently closing two mines in western Kentucky and laid off 130 workers at its Corridor G Mining Complex near Madison, West Virginia. The company moved its headquarters from St. Louis, Mo., to Scott Depot in January.
In 2013, a New York bankruptcy judge approved an $802 million financing package so Patriot could continue operating while it restructured.
That reorganization plan was approved three months later in Missouri after Patriot settled with Peabody following months of legal tangling over retiree health benefits. Under that deal, Peabody, which spun off Patriot in 2007, was to spend $310 million over four years to fund the benefits and provide about $140 million in letters of credit to Patriot.
During that restructuring, an 8th U.S. Court of Appeals bankruptcy panel reversed a U.S. bankruptcy judge's ruling that had said Peabody wasn't obligated to continue health care benefits for some 3,100 retirees.
United Mine Workers of America President Cecil Roberts said in a statement Tuesday that the latest bankruptcy filing had been anticipated, considering the overall struggles of the industry.
"It is not yet clear what Patriot's full intentions are in this bankruptcy, but I can promise this: We remain just as committed to fighting for our retirees' health care and pension benefits as we were in the last bankruptcy, and we remain just as committed to fighting for decent, safe jobs for our active members as we were last time," Roberts said. "This is just the beginning of this process, not the end."
Among the largest creditors listed by Patriot on Tuesday are $4.9 million owed to Peabody and $4.6 million to coal mine machine manufacturer Joy Global (JOY), both based in St. Louis; $2.3 million to the UMW health and retirement funds; and $1.5 million to the U.S. Mine Safety and Health Administration.
According to the Energy Information Administration, Patriot was the 12th largest U.S. coal producer with 20.8 million tons in 2013, the latest year available.