Peabody Energy has once again moved to assure workers that its Australian operations – including Wilpinjong mine - will continue to trade as normal despite the company filing for Chapter 11 bankruptcy protection in the United States.
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The miner said in a statement on Wednesday that the actions were “taking a major step to strengthen liquidity and reduce debt amid an unprecedented industry downturn”.
“Through this process, the company intends to reduce its overall debt level, lower fixed charges, improve operating cash flow and position the company for long-term success, while continuing to operate under the protection of the court process,” the statement said.
“All of the company’s mines and offices are continuing to operate in the ordinary course of business and are expected to continue doing so for the duration of the process.”
“No Australian entities are included in the filings, and Australian operations are continuing as usual.”
Peabody said that in 2015, the Australian platform earned more than the prior year despite lower prices for coal and the company’s administrative expenses and capital investments were at the lowest levels in nearly a decade.
“The factors affecting the global coal industry in recent years have been unprecedented,” Peabody acknowledged.
“Industry pressures in recent years include a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas and ongoing regulatory challenges.”
As well, the planned sale of the company’s New Mexico and Colorado assets was terminated after the buyer was unable to complete the transaction.
Chapter 11 is understood to offer much more protection to ailing companies than the administration process traditionally undertaken by struggling companies in Australia, and it is for that reason that Peabody’s Australian assets were not included.
In connection with the process, Peabody has obtained $800 million in debtor-inpossession financing facilities, which were arranged by Citigroup and include participation of a number of the company’s secured lenders and unsecured noteholders.
The facilities include a $500 million term loan, a $200 million bonding accommodation facility and a cash collateralized $100 million letter of credit facility, and are subject to court approval as well as limitations as set out in the company’s filings.
In addition to the company’s existing cash position, Peabody believes that it has sufficient liquidity to operate its business worldwide post-petition and to continue the flow of goods and services to its customers in the ordinary course.
Peabody employs about 440 people at its Wilpinjong mine in addition to 500 employees and another 100 contractors at Wambo mine near Singleton. The Department of Planning is assessing Peabody expansion proposals for both mines.
