May 5, 2016 Read More →

From Bankruptcy, Stronger Coal Industry Rivals

Dan Lowrey for SNL:

Publicly traded U.S. coal producers that have managed to stay afloat amid stricter regulations, cheap natural gas and warmer weather, now face the additional challenge of rivals emerging from restructuring relieved of debt burdens and operating at lower costs.

While that will toughen competition, analysts say most firms that avoided bankruptcy court so far are likely to continue to avert it at least in the short term.

Moody’s senior credit analyst Anna Zubets-Anderson told S&P Global Market Intelligence that remaining publicly traded coal producers are rated by Moody’s as “at risk,” but that because their debt loads are less than the major producers in bankruptcy, most of them are unlikely to file bankruptcy this year.

Beyond an extremely challenging operating environment, she said, they face the prospect of larger competitors emerging from bankruptcy court with a streamlined capital structure and a far more manageable debt load. “Part of the problem is that companies that emerge from Chapter 11 will have smaller debt burdens,” she said. “Those that filed will come out in a better position to compete,” leaving those that haven’t filed “disadvantaged.”

Full article ($): Remaining publicly traded coal miners to face a leaner competition

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