Massive Coal Company Takes Strides In Avoiding Bondholder Revolts

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Chris White Tech Reporter
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Beleaguered Coal Company Arch Coal said Tuesday it reached a deal with its unsecured creditors on a restructuring agreement in an effort to fend off waves of litigation from jilted bondholders

A swath of the company’s unsecured bondholders were offered $22.6 million, while other holders of common stock will be given $30 million in cash and stock under the amended plan. The deal could potentially appease investors who were once hell bent on suing the company over its failed efforts to stay out of Chapter 11 bankruptcy.

A U.S. bankruptcy court in St. Louis, Missouri is set to approve the reorganization plan Wednesday.

“The global settlement is a momentous achievement that should facilitate a timely and successful conclusion to our financial restructuring process,” John Eaves, Arch chairman and CEO, said in a statement.

“We are sharply focused on emerging from this court-supervised process in an expeditious manner, and as a stronger and more nimble player well-equipped to compete in a rapidly evolving marketplace,” the statement read, referencing the stiff headwinds the company faces.

The deal helps buoy Arch Coal’s confidence, especially after a year of turmoil and financial troubles.

Arch Coal, which is widely considered one of the largest coal producers in the U.S., filed for bankruptcy in January after delaying a $90 million interest payment last year.

The St. Louis-based company, widely considered one of the largest coal producers in the U.S., pulled its plans to construct a massive coal mine in Montana in March, a result of sinking coal markets and increased pressure from local fossil fuel activists.

The company was forced to abandon the plans amid a U.S. Energy Information Administration (EIA) report showing coal spiraling into near irrelevancy. The report indicated the coal industry should expect a 29 percent decrease in the first 3 months of 2016, as compared to the same point in 2015.

“That process has taken longer than anticipated, and further deterioration in coal markets has led to the decision to suspend the permitting effort,” company officials said at the time, adding that blame for the breakdown rests on “capital constraints, near-term weakness in coal markets and an extended and uncertain permitting outlook.”

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