US gas revolution claims first coal mining victim: James River files for bankruptcy
James River Coal (NASDAQ: JRCC), a mine operator in the US Midwest and Appalachia, filed for bankruptcy after markets closed Monday night as it continues its search for a buyer or investor.
Hit hard by a steep drop in prices and demand for both thermal and steel-making coal, the company — which sells coal to electric utilities and industrial customers— closed four of its Kentucky mines in November last year.
"We took this action to restructure under Chapter 11 [bankruptcy protection] because it will allow us to adjust the balance sheet and improve our liquidity in a controlled and definitive manner," James River Chairman and Chief Executive Peter T. Socha said in a statement. "We will also continue to explore and evaluate potential strategic alternatives for the company, such as a capital investment through a plan of reorganization or a sale of one or more portions of the company."
The Chapter 11 filing comes as the US coal industry, acutely miners with operations in the central Appalachian region, struggles to compete against new technologies like hydraulic fracturing, or fracking, that have freed up vast, untapped reservoirs of natural gas.
The company also said it would enter into a $110 million debtor-in-possession financing facility with several large financial funds.
James River said it expects to continue its mining operations and customer shipments through the restructuring process, adding it would use the new funding to support its business on approval by the bankruptcy court.
James River shares closed down 4.3% on Monday to $0.7154 in a 52-week range of $0.55 to $3.50.