* Chapter 11 filing comes as demand for natural gas rises
* Patriot lines up $802 mln bankruptcy financing
* Shares fall 72 percent to 61 cents
* Alpha Natural, Arch, Peabody shares also fall
By Matt Daily and Caroline Humer
July 9 Patriot Coal Corp filed for
bankruptcy on Monday, the first U.S. coal producer to seek court
protection since prices began to plummet as electricity
producers turned to cheaper natural gas.
The company and nearly 100 affiliates were part of the
Chapter 11 filing in the U.S. bankruptcy court in Manhattan.
Patriot said it had $3.57 billion of assets and $3.07 billion of
debts, and has arranged for $802 million of financing to help it
continue mining and shipments during the reorganization.
Coal producers' shares have plummeted as natural gas prices
tumbled to the lowest in a decade this year, and the U.S.
Environmental Protection Agency proposed new rules that would
make it nearly impossible to build coal-fired power plants.
Patriot said these factors, weaker economies worldwide and
the cancellation of customer contracts led to reduced liquidity
and financial flexibility.
While still the largest single fuel for electricity, coal's
share fell to 36 percent in this year's first quarter from 45
percent a year earlier, according to the Energy Information
"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," Chairman
and Chief Executive Irl Engelhardt said in a statement.
Patriot had also been hurt by its admission in May that a
key customer might default on a sales contract, forcing the St.
Louis-based company to seek a new loan package.
SHARES PLUNGE, DRAG DOWN RIVALS
Shares in Patriot slid 72.1 percent on Monday, closing down
$1.58 at 61 cents, after Bloomberg News reported that a
bankruptcy filing was imminent.
Patriot shares had traded as high as $24.99 last July. Its
8.25 percent notes maturing in 2018 closed down 8.5 cents on the
dollar at 34.5 cents, yielding 35.7 percent, according to the
bond price reporting service Trace.
The selloff drove down shares of rivals Alpha Natural
Resources Inc, Arch Coal Inc and Peabody Energy
Corp, which fell a respective 7.5 percent and 6.7
percent and 6.2 percent.
Spun off from Peabody in 2007, Patriot has 12 active mining
complexes in Appalachia and the Illinois Basin, and controls
about 1.9 billion tons of proven and probable coal reserves.
Patriot said Citigroup Inc, Barclays Plc and
Bank of America Corp's Merrill Lynch unit will provide
In May, Patriot said it had hired Blackstone Group LP
to work on a new financing package. It also installed Engelhardt
as chief executive, replacing Richard Whiting. Patriot hired
Davis Polk & Wardwell as its law firm.
The case is In re: Patriot Coal Corp, U.S. Bankruptcy Court,
Southern District of New York, No. 12-12900.