April 29, 2016 Read More →

Coal Industry’s Difficulties Prove a Windfall for Lawyers and Financial Types

Taylor Kuykendall for SNL:

The prolonged decline in global coal prices has sent a number of major producers into bankruptcy, costing equity investors, lenders and suppliers billions. But for those firms overseeing producers’ reorganization efforts, the fallout has proven lucrative.

According to S&P Capital IQ data, the six largest coal company bankruptcies since 2012 have spent at least $117.0 million for legal and financial advice on their reorganizations. That total does not account for the rest of the full list of about 50 coal company bankruptcies filed since 2012.

The $117.0 million figure, by comparison, is larger than the market capitalization of coal miner Rhino Resource Partners LP and approaching the approximately $135 million market cap of Westmoreland Coal Co.

Once considered a rising star in the U.S. coal industry, Illinois Basin producer Foresight Energy LP’s entire market value is less than two and a half times higher than the amount spent in those bankruptcies. Foresight may have come close to a bankruptcy filing itself recently, even filing a going concern notice during prolonged and frequently delayed negotiations with bondholders.

Alpha Natural Resources Inc. appears to be the most expensive bankruptcy so far. The company has reported $28.4 million in bankruptcy adviser fees. Coming in at a very close second is Walter Energy Inc., also reporting bankruptcy professional fees of that magnitude.

Peabody Energy Corp., reports it has already been billed for $27.5 million in bankruptcy advisory fees though it has just begun the bankruptcy process.

Arch Coal Inc. has reportedly been billed $18.5 million in bankruptcy advisory fees. Patriot Coal Corp. reported it was billed $3.3 million in adviser fees for its first bankruptcy in 2012, only to be forced to spend another $10.9 million on a second bankruptcy just a few months later.

Full article ($): Top coal bankruptcies spawn $117M market for financial, legal advisers

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