An insurance company is demanding nearly $128 million in collateral from Peabody Energy Corp., citing the company’s “deteriorating” financial condition.
In a lawsuit filed Thursday by Argonaut Insurance Co., the company says it has issued over $202 million in surety bonds to Peabody-associated entities around the globe. They are mostly reclamation-type bonds issued to ensure that mines and surrounding lands are restored after mining operations end, the suit says.
Beginning in August, Argonaut demanded that it be released from the bonds, citing Peabody’s “deteriorating” financial condition, the suit says. Peabody could alternately provide sufficient collateral or an irrevocable letter of credit.
Peabody has provided $75 million in collateral, but Argonaut wants nearly $128 million more, or 100% of the value of the bonds, the suit says. The lawsuit seeks a judge’s order that would enforce the terms of the bonds.
In a statement, Peabody said it is “seeking a mutually agreeable solution,” and promised “a comprehensive update” on collateral requests during their Nov. 9 announcement of their quarterly financial results.
St. Louis-based Peabody, like other coal companies, has struggled during the coronavirus pandemic and due to decline in demand.