World’s top coal firm Peabody files for bankruptcy

Peabody Energy Corporation, the world’s largest private coal producer, filed for US bankruptcy on Wednesday after a recent sharp fall in coal prices.

The company, based in St. Louis, Missouri, was unable to service a recent debt-fuelled expansion in Australia.

According to a court filing, Peabody listed both assets and liabilities in the range of $10 billion to $50 billion.

The bankruptcy filing ranks among the largest in the commodities sector since energy and metals prices began falling in 2014 as the fast-growing markets of China and Brazil began to stall.

In a statement, Peabody’s Chief Executive Officer Glenn Kellow, said: “This was a difficult decision, but it is the right path forward for Peabody. This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future.”

The firm said that is has secured $800 million in debtor-in-possession financing from both secured and unsecured creditors, including a $500 million term loan, $200 million bonding accommodation facility and a letter of credit worth $100 million.

The company’s debt issues can be traced back to its $5.1 billion leveraged buyout of Australian coal firm Macarthur in 2011.

Peabody’s financial woes intensified as demand for metallurgical coal fell, particularly in China, and the firm made a $700 million write-down on its Australian metallurgical coal assets in 2015.

Based on 2014 government figures, coal producers accounting for about 45 per cent of US coal output have filed for bankruptcy in the current downturn.