Peabody Energy files for bankruptcy

Coal producer Peabody Energy has filed for US bankruptcy protection as it looks to reduce its overall debt level, lower fixed charges and improve operating cash flow following a big drop in coal prices.

Peabody said all of its mines and office are still operating in the ordinary course of business and are expected to continue doing so for the duration of the process.

In addition, the company said none of its Australian entities are included in the filings, with operations there continuing as usual.

Chief executive officer Glenn Kellow said: “This was a difficult decision, but it is the right path forward for Peabody. We begin today to build a highly successful global leader for tomorrow.

““Through today’s action, we will seek an in-court solution to Peabody’s substantial debt burden amid a historically challenged industry backdrop. This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future.”

Peabody has secured $800m in debtor-in-possession financing facilities. This includes a $500m term loan, a $200m bonding accommodation facility and a letter of credit worth $100m.

In addition to its existing cash position, Peabody reckons it has sufficient liquidity to operate its business worldwide post-petition and to continue the flow of goods and services to its customers in the ordinary course.

At 1500 BST, Peabody shares were down 2.8% to $2.06.