BRISTOL, VA (WJHL) – Alpha Natural Resources officials announced that the company filed voluntary petitions in U.S. Bankruptcy Court Monday.
According to the release, the board of directors of Alpha hopes the filing of Chapter 11 will “enhance the company’s future as it weathers a historically challenged coal market.”
Alpha Natural Resources, Inc. (OTC PINK: ANRZ) and certain of its wholly-owned subsidiaries filed voluntary petitions today with the United States Bankruptcy Court for the Eastern District of Virginia in Richmond to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
The Board of Directors of Alpha Natural Resources authorized the filing of the Chapter 11 cases to enhance the company’s future as it weathers a historically challenged coal market. The relief provided by Chapter 11 will allow the company to reorganize and emerge as a financially viable business that is better positioned to compete in dynamic energy markets.
The Company will promptly seek the necessary immediate relief from the Bankruptcy Court that will allow normal business operations to continue uninterrupted while in Chapter 11, with coal being mined, customer commitments honored, and wages and benefits for Alpha’s affiliated employees paid. Alpha Natural Resources affiliates operate more than 50 underground and surface mines and more than 20 coal preparation facilities in Virginia, Kentucky, West Virginia, Pennsylvania and Wyoming.
Alpha’s Chairman and CEO Kevin Crutchfield said: “While a difficult decision, this voluntary Chapter 11 filing is the right strategy at the right time for the future of our business. It will enable us to build on the significant steps we have taken over the past several years to restructure our debt and protect our operations. I am confident Alpha will emerge from this process as a stronger company, with a diversified resource base and better positioned for the future.”
Crutchfield noted that the U.S. coal industry is in an unprecedented period of distress with increased competition from natural gas, an oversupply in the global coal market, historically low prices due to weaker international and domestic economies, and increasing government regulation that has pushed electric utilities to transition away from coal-fired power plants. But he also emphasized that neither Alpha nor the U.S. coal industry should be thought of in the past tense – while the sector will likely get smaller, coal will continue to play a critical role in providing affordable and reliable electricity and in the production of steel for infrastructure.
“The change and challenges the U.S. coal industry has experienced over the last several years are greater than any in the past three decades,” Crutchfield said. “There is no doubt more uncertainty ahead, but also transformational opportunity in the coal sector for those who make proactive, strategic decisions.”
The Company has secured an 18-month Debtor-in-Possession (DIP) financing package totaling up to approximately $692 million, arranged by Citigroup, and led by a group of both its first and second lien lenders. The DIP financing package demonstrates the support of its secured creditors and provides the Company with significant operational flexibility to successfully reorganize. Accordingly, Alpha enters this process with the necessary liquidity to support its ongoing operations (which will continue to generate additional cash).
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