In a sign of coal's weakening dominance in the power sector, Patriot Coal Corp. and nearly 100 of its affiliates on Monday filed for Chapter 11 protection in U.S. Bankruptcy Court in New York City.
"The coal industry is undergoing a major transformation, and Patriot's existing capital structure prevents it from making the necessary adjustments to achieve long-term success," said CEO Irl F. Englehardt.
In its petition Patriot listed $3.57 billion in assets and $3.07 billion in debt (Patriot Coal Corp., U.S. Bankruptcy Court, Southern District of New York, No. 12-12900). It has arranged for $802 million in financing to continue mining and for shipments as it reorganizes.
Natural gas in April had the same share of U.S. power generation as coal, according to the U.S. Energy Information Administration (EIA) (see Daily GPI, June 28). The U.S. Environmental Protection Agency also has proposed new regulations that would make it difficult to build coal-fired power plants (see Daily GPI, March 28). Last month, gas consumption increased, mainly due to more power plants burning gas at the expense of coal, EIA said (see related story).
Patriot cited a changing business environment, as well as weaker economies worldwide and some canceled customer contracts, which have reduced liquidity and financial flexibility. Patriot in May hired Blackstone Group LP to complete a new financing package, and it made Englehardt CEO, replacing Richard Whiting.
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