Peabody Energy Topples In The Beleaguered Coal Industry by Dave Forest, OilPrice.com
Historic day in the coal sector yesterday. With one of the world’s largest producers saying that it may soon disappear completely.
That’s Peabody Energy. America’s top coal miner, and the most high-profile firm in the West when it comes to the beleaguered coal industry.
It's no secret that this year has been a volatile one for the markets. The S&P 500 is down 18% year to date, while the Nasdaq Composite is off by 27% year to date. Meanwhile, the VIX, a key measure of volatility, is up 49% year to date at 24.72. However, it has spiked as Read More
Peabody said in a filing to the U.S. Securities and Exchange Commission that its ability to operate as a going concern is now in doubt. As the company noted, “There can be no assurance that our plan to improve our operating performance and financial position will be successful. We may need to voluntarily seek protection under Chapter 11.”
The news comes after Peabody missed payment Tuesday on $71 million in interest due on $1.65 billion worth of bonds. The company has now entered into a 30-day grace period to make the payments.
For investors, the carnage was severe — with Peabody’s share price taking its biggest-ever intraday drop, falling as much as 49.9 percent. As the chart below shows, the stock is down more than 99.5 percent since 2011.
All of this comes as a result of the incredibly depressed state of global coal markets. And although Peabody was the poster child this week, there were plenty of other woes globally in this business.
Just a day before the Peabody announcement, fellow U.S. coal miner Foresight Energy told investors it may also have to declare bankruptcy. This after the firm missed $23.6 million in interest payments on its $1.5 billion debts.