Arch Coal IncNYSE
Arch Coal - Bond Exchange Is A Win-Win
William Koldus, CFA, CAIA • 79 Comments
William Koldus, CFA, CAIA • 79 Comments
Wed, Nov. 9, 12:26 PM
- Coal stocks (KOL +2.5%) are surging, as Trump's election sparks hope that his administration can reverse the fuel’s long decline in the U.S.
- But analysts say the main culprit for coal’s decline is natural gas, which has flooded the market since the rise of fracking, which seems unlikely to change, as Trump also has promised to liberalize fracking; “cheap natural gas will continue to threaten the coal industry," says Andrew Moore of Platts Coal Trader.
- Analysts say it remains unclear whether Trump’s election is a signal to buy coal stocks, but at the least, “this is a sign that coal isn’t going away," Moore says.
- OTCPK:BTUUQ +43.2%, FELP +25.4%, OTCQB:RHNO +20.7%, CLD +16.7%, WLB +17.5%, WMLP +19.4%, ARCH +11.2%, CNX +6%, AHGP +5.8%, ARLP +4.1%.
Fri, Oct. 28, 2:48 PM
- Cloud Peak Energy (CLD +12.1%) is surging after reporting a surprise Q3 profit, as shipments rose to average 5.7M tons/month, a big improvement over average H1 shipments of 4.1M tons/month.
- CLD also raises 2016 EBITDA guidance to $90M-$100M from its earlier outlook for $75M-$95M, and trims its 2016 capex guidance to $30M-$40M from $35M-$45M.
- While cautioning against premature excitement, analysts at BMO say Powder River Basin "fundamentals are improving (off a low base), demand is stabilizing, production remains low (for now), and inventories are declining (but still above normal)," and higher global thermal prices have brought CLD’s "historically high-margin exports back into the mix."
- Coal producing peers are higher: CNX +1.5%, WLB +2.9%, ARCH +1%.
Wed, Oct. 5, 11:40 AM
- Arch Coal (OTCPK:ACIIQ) says it has completed its restructuring and has emerged from Chapter 11 bankruptcy, and its stock will begin trading on the NYSE under the ticker ARCH.
- Arch says it has ~$300M of cash on its balance sheet and $363M in debt, just 7% of its debt prior to restructuring, and projects $55M in capital spending for 2017.
- FBR analysts initiates coverage with an Outperform rating and $71 price target, saying the new company is ready to take advantage of the higher coal price environment and that the domestic thermal coal market is turning the corner, potentially leading to higher sales and prices in Arch’s large Powder River Basin platform.
Wed, Sep. 14, 8:21 AM
- Arch Coal (OTCPK:ACIIQ) won court approval yesterday for its reorganization plan, which would eliminate $4.7B of debt from its balance sheet and clear the path to emerge from bankruptcy in early October.
- Unsecured creditors including bondholders will get $30M in cash and 6% of the new shares, and bondholders also get to choose between warrants to buy up to 12% of ACI's new common shares or $25M in additional cash; current shareholders will be wiped out under the plan.
- As part of its reorganization plan, ACI agreed to set aside collateral to cover future mine cleanup costs, ending its use of self-bonding.
Mon, Sep. 12, 5:58 PM
- Arch Coal (OTCPK:ACIIQ) agrees to set aside collateral to cover future mine cleanup costs as part of its bankruptcy reorganization plan, ending its use of self-bonding, which exempts companies from posting bonds or other securities to cover the cost of returning mined land to its natural state.
- The coal miner had $485M in self-bonds in Wyoming when it filed for bankruptcy protection in January amid $6B of debt.
- ACI initially resisted replacing its self-bonds, arguing in court filings that providing other forms of guarantees would eat into its liquidity.
- ACI, Peabody Energy (OTCPK:BTUUQ) and Alpha Natural Resources (OTCPK:ANRZQ) had a combined $2.2B in self-bonding liabilities when they filed for bankruptcy over the past 13 months.
Tue, Aug. 16, 5:27 PM
- The Office of Surface Mining and Reclamation Enforcement announces plans to toughen "out-of-date" rules on self-bonding, the program that allows healthy coal companies (NYSEARCA:KOL) to post promissory notes instead of collateral to guarantee returning disturbed land to its natural setting.
- Among the changes, the regulator proposes modifying self-bonding eligibility standards, diversifying financial assurance options for mine cleanups and ensuring an independent third-party review of self-bonded entities' current and future financial health.
- Peabody Energy (OTCPK:BTUUQ), Alpha Natural Resources (OTCPK:ANRZQ) and Arch Coal (OTCPK:ACIIQ) - three of the four largest U.S. coal companies - have filed for bankruptcy in the past year, with more than $2B in self-bonds for future mine cleanups across several states.
Tue, Jul. 5, 1:47 PM
- Arch Coal (OTCPK:ACIIQ) says it reached agreement with unsecured creditors for a Chapter 11 restructuring plan that would allow it to exit bankruptcy without the threat of litigation.
- Arch is offering holders of allowed general unsecured claims 6% of the new common stock of the reorganized company, warrants to buy more of the company stock and $30M in cash, with $22M of the cash earmarked for bondholders.
- Senior managers will surrender claims to $6M in incentives to help the new plan gain momentum, as part of the compromise that would end the threat of litigation over the company’s failed efforts to stay out of bankruptcy.
Wed, Jun. 15, 11:26 AM
- Arch Coal (NYSE:ACI) has failed to pick up widespread support for its Chapter 11 exit plan, according to a newly revised version of the plan filed in bankruptcy court yesterday.
- In court papers seen by Dow Jones, ACI revealed it has failed to reach agreement between its lenders and unsecured creditors, including bondholders owed ~$4B; as a result, the company likely is looking at a fight in pushing its exit plan through bankruptcy court.
- ACI sought Chapter 11 protection in January with the support of some senior lenders for a restructuring, and has been engaged in talks aimed at bringing unsecured creditors on board.
Wed, May 18, 4:58 PM
- The U.S. is considering whether to reign in the self-bonding subsidy on coal mine cleanup costs and thus shield taxpayers from those liabilities, says the director of the Office of Surface Mining and Reclamation Enforcement.
- Peabody Energy (OTCPK:BTUUQ), Arch Coal (NYSE:ACI) and Alpha Natural Resources (OTCPK:ANRZQ) have gone bankrupt in the last 10 months and left behind ~$3.6B in self-bond liabilities.
- Environmentalists have warned officials that coal-producing states in the west left the self-bonding program open to abuse, and the regulator says it will investigate those concerns.
Mon, May 9, 11:24 AM
- Arch Coal (NYSE:ACI) may be in for a fight over its bankruptcy plan, which gives most of the company’s new common stock to secured lenders and which does not have bondholder support, Dow Jones reports.
- Restructuring talks reportedly are continuing with unsecured creditors, which earlier in the bankruptcy filed court papers in which they said the terms under discussion would allow the lenders to "take over the company, without regard for the value that would otherwise go to unsecured creditors."
- ACI sought Chapter 11 protection in January after securing the support of certain lenders on the parameters of its debt restructuring.
Wed, Mar. 16, 11:57 AM
- The bad news coming from Peabody Energy and other coal companies could damage Joy Global (JOY -0.3%), as Axiom Capital analyst Gordon Johnson notes that 59% of JOY's 2015 revenues came from the sale of equipment to coal miners globally.
- "Along these lines, we feel the announcement by BTU today could have incrementally negative implications for JOY’s ability to achieve its FY 2016 guidance,” Johnson writes.
- According to Johnson, JOY’s OEM revenues historically have an 87% correlation to the mining capex of the big five U.S. coal miners: Peabody (BTU -43.6%), Arch Coal (ACI -3.4%), Consol Energy (CNX -1.4%), Alliance Resource Partners (ARLP -0.1%) and Cliff Natural Resources (CLF -8.4%).
Tue, Feb. 23, 3:46 PM
- Coal companies must face the costs of mine cleanup even as they get pushed toward bankruptcy, U.S. Interior Secretary Jewell tells a Senate committee.
- Bankrupt Alpha Natural Resources (OTCPK:ANRZQ) and Arch Coal (NYSE:ACI) have sought to escape cleanup liabilities in bankruptcy court, which Jewell says the will not tolerate.
- Of the ~$2B in future cleanup costs facing Peabody Energy (BTU -1.6%), nearly 75% of the total is self-bonded and has no concrete backing, and investors worry that any call to replace self-bonds with costly surety bonds could push the struggling miner into bankruptcy.
Wed, Jan. 13, 12:58 PM
- Arch Coal's (NYSE:ACI) bankruptcy filing has some citizens groups worried about the company's ability to clean up pollution at its Wyoming mines, WSJ reports.
- ACI’s lenders have agreed to cover up to $75M in cleanup and other regulatory obligations in connection with a proposed $275M bankruptcy loan, well short of the $485M in self bonds that court papers show ACI has posted for its Wyoming mining operations; as a result, private citizens’ groups such as Taxpayers for Common Sense and Wyoming landowners group Powder River Basin Resource Council are expressing concern.
- The report says ACI appears to be using the Chapter 11 restructuring of Alpha Natural Resources as the playbook for its own bankruptcy when it comes to environmental obligations; Alpha’s bankruptcy lenders agreed to make up to $100M of its $700M bankruptcy-financing package available to cover cleanup obligations, and Alpha later settled demands from state regulators to replace more than $650M in self-bonds by offering them $100M in financial assurances.
Tue, Jan. 12, 6:14 PM
- In court today, lawyers urged unhappy creditors of Arch Coal (ACI; ACIIQ -67.5%) to join negotiations in its bankruptcy, saying that the company's plan has broad support from its senior lenders.
- The No. 2 U.S. coal miner filed for bankruptcy yesterday with an aim to eliminate $4.5B in debt, the latest to head for Chapter 11 amid the coal slump.
- The firm says it has the support of 66.3% of lenders to cut its debt and continue mining operations (it has ample financing to maintain activities), and that it's not plagued with labor issues that had a greater effect on its predecessors into bankruptcy (including Walter Energy, Alpha Natural Resources and Patriot Coal).
- Judge Charles Rendlen approved $275M in debtor-in-possession financing and the use of $600M in cash.
- "Don't file papers. Please, just call us," said attorney Marshall Huebner to creditors. Junior lenders are being offered a small amount of equity or the value of assets that aren't pledged as collateral for the senior loans.
- Previously: Arch Coal bankruptcy weighs mining stocks (Jan. 11 2016)
- Previously: Arch Coal files for bankruptcy (Jan. 11 2016)
Mon, Jan. 11, 2:49 PM
- Arch Coal (ACI -50.7%) is cut in half following news it has filed Chapter 11 bankruptcy and will be delisted from the NYSE, and the miner says its discussions with customers indicate that even after tumbling domestic coal demand the past eight years, "2016 pricing will remain weaker than previously anticipated."
- ACI's default on $3.2B of debt bring the metals and mining sector’s trailing 12-month default rate to 15% from 11% at the end of December and the default rate for the coal subsector an "unprecedented" 43%, according to Fitch Ratings.
- Analysts say investors should expect more such bankruptcies among commodity companies this year, as a strong dollar and slowing global demand growth should keep downward pressure on commodity prices.
- ACI's bankruptcy helps drag down other mining names today: BTU -19%, CNX -10.8%, YZC -2.3%, NRP -7.2%, CLD -11.4%, WLB -5.1%, ARLP +0.1%, KOL -2.6%.
Mon, Jan. 11, 4:58 AM
- Arch Coal (NYSE:ACI) files for Chapter 11 bankruptcy.
- The company aims to eliminate $4.5B in debt through a reorganization.
- There is ample financing in place for normal mining activities to stay on course.
- Shares of Arch Coal are down 99% over the last year with a bankruptcy filing widely anticipated.