TORONTO (miningweekly.com) – US coal miner James River Coal on Monday filed for Chapter 11 bankruptcy protection after it had been grappling with weak coal prices for months.

The Richmond, Virginia-based company said that it planned to use the Chapter 11 process to continue implementing a comprehensive turnaround plan aimed at addressing its challenges in the changing coal mining industry.

James River expected its mining operations and customer shipments to continue as normal throughout the restructuring process.

In conjunction with its restructuring, James River would enter into a $110-million debtor-in-possession financing facility with several large financial funds. If approved by the Bankruptcy Court, the new financing and cash generated from James River's ongoing operations would be used to support the business during the restructuring process.

“The coal markets in the US have changed dramatically during the past several years. Some of these changes are cyclical due to continued weakness in the real economy. Other changes are more permanent like changes in government environmental regulations, improved methods to produce natural gas, and switching between coal basins by domestic power utilities.

“We have made a number of large and significant changes to our mine operations and administrative overhead in response to the changes in the coal markets. Now we need to adjust our balance sheet and debt structure to align ourselves to the new industry,” James River chairperson and CEO Peter Socha said.

He added that the company had embarked on a restructuring strategy under Chapter 11, believing it would allow the company to adjust the balance sheet and improve its liquidity in a controlled and definitive manner.

“We will also continue to explore and evaluate potential strategic alternatives for the company, such as a capital investment through a plan of reorganisation or a sale of one or more portions of the company,” Socha said.

Last month, James River said that it would not make the interest payment due on $230-million of its 3.125% convertible senior notes that would mature in 2018, sending the company’s stock into freefall.

In February, James River first revealed that it was exploring and evaluating potential strategic alternatives for the company, which might include a capital investment through debt and/or equity securities, or a sale of all or one or more portions of the company.

The company has operations in Central Appalachia and the Illinois basin, and sells metallurgical, bituminous steam and industrial-grade coal to electric utility companies and industrial customers both domestically and internationally.

Last year, the company shuttered several coal mines to cut costs.

In November, it idled four of its Central Appalachian coal mines, as continued weak coal prices haemorrhaged the company’s third-quarter results. The Richmond, Virginia-based company idled two underground and two surface mines at its Buckeye complex, and furloughed about 200 employees and contractors. The company stated that it expected the complex, which produced one-million tons in the first nine months of the year, to restart in 2014 depending on market conditions.

James River in October idled coal production at its McCoy Elkhorn operations, its Bledsoe coal operations and the Long Branch surface operations, owing to the continued soft coal market.