December 29, 2020 Read More →

Peabody debt refinancing ‘kicking the can down the road’

Casper Star-Tribune:

Refinancing a car loan can be confusing. But renegotiating the debt held by the country’s largest coal company is even more convoluted.

On Christmas Eve, coal giant Peabody Energy announced it had reached an agreement with creditors to refinance a majority of its debt.

Peabody Energy is the leading coal operator in Wyoming. It owns the North Antelope Rochelle, Rawhide and Caballo mines in the Powder River Basin and employs about 1,300 Wyoming miners.

But thermal coal production at its facilities in Wyoming was roughly a quarter less this year when compared to 2019. Revenue was down too. Demand for coal has been declining for about a decade. But the COVID-19 pandemic became the main culprit of depressed market conditions this year. Industrial demand for electricity has waned with stay-at-home orders and a constricted economy.

Energy analysts predict Thursday’s big agreement helped the publicly traded company avert bankruptcy. But the deal was also just one more sign of the uncertainty plaguing mining communities in the Wyoming coal country. 

“This is a case of a company under stress,” said Clark Williams-Derry, an energy finance analyst for the Institute for Energy Economics and Financial Analysis. “They’re buying a few years, hoping that coal markets will recover and that the company can avoid a financial meltdown.”

But ultimately, Peabody is “kicking the can down the road,” he added. “In this case, it buys them two or three more years worth of road.” 

[Camille Erickson]

More: What does Peabody Energy’s decision to refinance its debt mean for the Powder River Basin?

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