Patriot Coal Corp. (NYSE: PCX), a producer and marketer of coal products in the eastern U.S., announced that the company and a majority of its wholly owned subsidiaries have voluntarily filed for Chapter 11 bankruptcy on July 9 in order to undertake a comprehensive financial restructuring. The filing was made in the Bankruptcy Court for the southern District of New York.
Patriot said it expects its mining operations and customer shipments to continue throughout the reorganization process.
Patriot has obtained a commitment for $802 million in debtor-in-possession (DIP) financing from Citigroup Global Markets Inc., Barclays Bank PLC, and Merrill Lynch, Pierce, Fenner & Smith Inc. as joint lead arrangers. Upon approval by the Bankruptcy Court, the new financing and cash generated from Patriot’s ongoing operations will be used to support the business during the reorganization process.
“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 Patriot Chairman and Chief Executive Officer Irl Engelhardt. “Our objective is to use the reorganization process to address important issues in an orderly way and make the company stronger and more competitive.”
Patriot’s business outlook has been impacted by a number of challenges that are affecting the coal industry, including reductions in U.S. thermal coal demand due to competition from low priced natural gas, environmental regulations affecting the cost of producing and using coal, and weaker international and domestic economies. Patriot has reduced production and closed down mines in response.
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