Arch Coal (NYSE:ACI), the U.S. second-largest miner of the commodity, said Monday it had filed for chapter 11 bankruptcy protection as part of a restructuring aimed at reducing debt by $4.5 billion.
The St. Louis-based company said it reached an agreement with a majority of lenders under its $1.9 billion first-lien facility to restructure its debt. It added it entered into a restructuring-support agreement with members of an ad hoc group of lenders that hold more than 50% of its first-lien debt.
“The company believes it has sufficient liquidity to continue its normal mining activities and to meet its obligations in the ordinary course,” Arch Coal said in the statement.
In December, the firm exercised a 30-day grade period to pay about $90 million in interest payments due Dec. 15 on bonds. Also last month, the New York Stock Exchange told the company it didn’t meet the standards to remain listed.
The Institute for Energy Economics and Financial Analysis disputes Arch Coal’s claims of being able to keep operating.
“Like most of the coal industry Arch’s outlook continues to be unrealistic, avoiding hard questions,” IEEFA’s director of finance, Tom Sanzillo, told MINING.com.
He added that Arch cannot continue to operate “zombie” mines and “chase the ghosts of past markets,” and that no bankruptcy plan should be approved.
Sanzillo believes the company continues to be “overweighted in Central Appalachian coal, unrealistic in its pursuit of exports off the west coast and out of touch with domestic competition from natural gas and renewables.”
Arch Coal’s move is the latest blow for the ailing fossil fuel sector, which is struggling to adapt to tougher regulations, aimed at reducing carbon emissions.
U.S. coal production fell to 900 million short tons in 2015, the Energy Information Administration revealed on Friday, a 10% decline on the previous year.