Arch shareholders reject debt swap offer, pushing company to bankruptcy brink
TORONTO (miningweekly.com) – US-based miner Arch Coal has terminated a debt exchange offer after shareholders rejected the company’s bid to restructure its balance sheet, potentially pushing the company to the brink of bankruptcy.
Arch noted on Tuesday that it was currently in talks with various creditors regarding a restructuring of its balance sheet, giving investors hope that the company could still manage to get through the downturn in coal prices without fining for creditor protection.
The company had about $5.1-billion in debt and, in July, announced that it wanted to swap up to $2.4-billion of junior-ranked debt for new longer-term senior securities, in an effort to strengthen its balance sheet.
Arch’s NYSE-listed stock on Tuesday morning fell as much as 38% and changed hands at $1.58 apiece before noon.
Coal miners across the globe had been dealing with stubbornly low coal prices, a global supply glut and competition from cheap natural gas, which had forced cash-strapped miners to idle unprofitable mines and retrench thousands of workers. In the US, increasingly strict environmental legislation also had a stranglehold on the thermal coal industry’s growth prospects.
These factors had already sent Alpha Natural Resources, Patriot Coal and other coal miners over the edge, forcing them to file for Chapter 11 bankruptcy protection.
Arch planned to release its third-quarter results on November 9.
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