Seeking Alpha

With no end in sight to cash burn, Alpha Natural creditors' alarm grows

  • The plunge in coal prices that has sent smaller competitors into bankruptcy is alarming bondholders in Alpha Natural Resources (ANR), as the no. 2 U.S. coal producer consumes more cash than ever, Bloomberg reports.
  • ANR’s $3.43B of debt equals 37.9x EBITDA, highest among U.S. coal producers, and its bonds have lost more than 9% this year, the most among met coal producers in the Bloomberg High Yield Corporate Bond Index.
  • "It’s going to get worse before it starts getting better," one analyst says. "It’s a completely oversupplied market."
Comments (7)
  • Stone Fox Capital
    , contributor
    Comments (5788) | Send Message
     
    thats what they say at the bottom all the time. Wasn't the nat gas market oversupplied until inventories hit decade lows this year???
    15 Apr, 06:56 PM Reply Like
  • nemonemo
    , contributor
    Comments (309) | Send Message
     
    lol none talks about NG assets worth 2B . Funny.
    15 Apr, 07:31 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    they don't call them "Bloomturds" for nothing.
    15 Apr, 11:46 PM Reply Like
  • pytiz
    , contributor
    Comments (125) | Send Message
     
    I still don't know if there is a good entry point for $ANR or $WLT... first was 6 and 10, now at 4 and 7 it may still be a shot in the dark....
    16 Apr, 03:27 AM Reply Like
  • ckbmingo
    , contributor
    Comments (2) | Send Message
     
    Just wait until they figure out what advanced water treatment is going to cost.
    16 Apr, 09:06 AM Reply Like
  • coal miner2
    , contributor
    Comments (5) | Send Message
     
    More bad news for us!
    16 Apr, 09:44 AM Reply Like
  • Brian Grad
    , contributor
    Comments (68) | Send Message
     
    ANR's bonds only trade in the mid 10% range and while certainly high yield, nowhere near distressed levels indicating bankruptcy. In addition, while I agree with the cash burn number for 2014, ANR currently holds $1.2 billion in cash and has a $1 billion undrawn revolver for total liquidity of $2 billion net of the projected cash burn.

     

    I will not argue that the met market is oversupplied and that ANR has some assets that are not economical at the current prices which most likely should be idled or permanently closed. I just think it is overly alarmist to be thinking BK on this with as much available liquidity that they have.
    16 Apr, 09:29 PM Reply Like
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