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Market Cap of U.S. Coal Companies Continues to Fall

March 23, 2016

Christopher Coats for SNL:

The combined market value of major publicly traded U.S. coal producers continues to erode, now standing at approximately $4.59 billion, or 4.7% less than in November 2015, according to an S&P Global Market Intelligence analysis.

Since April 2011, the group of 13 U.S. coal producers has lost more than 92% of its value, with the companies’ combined market capitalization falling from $62.5 billion to $4.59 billion amid historically weak coal market conditions.

Foresight Energy LP, which has struggled to resolve negotiations with the trustee of its 7.875% senior notes due 2021, showed a 68.6% drop from the last analysis to just $188.7 million in March. Foresight has extended negotiations with the trustee several times since the beginning of the year after a Delaware court ruled against the company in December 2015 in a case brought by the trustee of the bondholders. The latest extension of the negotiations expires March 22.

Meanwhile, Peabody Energy Corp. showed a 78.9% drop from the previous period to just $46.4 million. The company recently issued a notice to investors indicating substantial doubt as to whether the company will be able to continue as a going concern and warned of a potential Chapter 11 bankruptcy reorganization. In April 2011, Peabody was far and away the most valued U.S. coal producer with a market capitalization of $19.68 billion.

Having filed for bankruptcy protection since November 2015, Arch Coal Inc. saw an expected decline, falling from $22.4 million to just $4.9 million on March 19. Like Alpha, Walter Energy Inc. and Patriot Energy before it, Arch is now in the process of navigating bankruptcy reorganization.

Arch recently announced that it would suspend its efforts to secure a mining permit for the Otter Creek Coal reserves near Ashland, Mont., reflecting the difficult challenges it now faces as it moves forward.

Full article ($): CONSOL bucks trend, but market value keeps eroding for most coal producers

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