Arch Coal emerged from bankruptcy Wednesday, shedding most of its $6 billion debt and adding insurance for about $400 million in eventual cleanup costs at its Wyoming mines.
The St. Louis-based company shed $4.7 billion of what it owed when it filed for Chapter 11 protection in January. The company is the second-largest producer of thermal coal in the U.S. and has $300 million in cash, according to a company statement released Wednesday. It also carries $363 million in debt, mostly the result of a new term loan and capital leases, according to the company.
“I am confident we have all the pieces in place for long-term success — an extraordinary workforce, cost-competitive assets, a high-quality reserve base, a clean balance sheet and an excellent management team,” the company’s CEO John Eaves said in a statement Monday.
Arch, which operates the Black Thunder mine near Wright, is one of three large coal companies operating in Wyoming to file for Chapter 11 protection since last year and the second to re-emerge. Alpha Natural Resources exited bankruptcy in July as a new company, Contura Energy. Peabody Energy, which owns the North Antelope Rochelle mine near Gillette, has yet to finish restructuring.
The bankrupt companies accrued significant debt when the metallurgical coal market ballooned, and Chinese demand appeared insatiable. Those proved to be bad bets when the coal market plunged to 30-year lows.
Arch, Alpha and Peabody laid off a combined 502 Wyoming coal miners in April.
Coal is projected to rally, though not to its former glory, according to most analysts. The post-bankruptcy companies have good odds and less debt to constrain their financials, some say.
Wyoming is known for thermal coal, which is used to generate electricity. That market has not been as successful as its sister, the metallurgical market, which recently experienced growth. Arch has a dominant position in the metallurgical market, which services the steel industry.
“We are particularly pleased to be emerging in a resurgent metallurgical market, and look forward to similar strengthening in thermal coal markets in the months ahead,” Eaves said. “With our enhanced financial foundation and top-tier assets, we believe we are exceptionally well-positioned to capitalize on both.”
Arch’s self-bonding obligations were a matter of great concern in Wyoming, where environmentalists argued the company’s insolvency made them ineligible for the practice.
Wyoming regulators allowed Arch, and Alpha Natural Resources earlier in the bankruptcy story, to continue operating with self-bonds until the end of their restructuring processes.
Federal coal regulators have made recent moves to discourage the self-bonding practice, but Wyoming and other states maintain their right to choose how companies guarantee cleanup costs for their operations.