Wednesday was a tough day for the American coal industry.
Late on Wednesday afternoon, coal producer Walter Energy announced it was filing for Chapter 11 bankruptcy.
Around the same time, the Wall Street Journal first reported that competitor Alpha Natural Resources was preparing to do the same.
Bankruptcy has been plaguing the industry in the past several months as companies struggle with slowing coal demand.
The industry has also faced oversupply, as well as intense competition from natural gas.
Walter Energy has been subject to bankruptcy rumours since April. According to the Journal, the company has reported annual losses every year since 2011 and is currently grappling with more than $US3 billion in debt.
As part of the proposed restructuring, Walter’s senior creditors will have all their debt converted to equity in the company.
“This restructuring plan provides a road map for Walter Energy to establish a sustainable capital structure, make further changes to operational cost drivers, and ensure that the Company can continue to operate safely and competitively in the years ahead,” CEO Walt Scheller said in a statement.
“With the support of our key senior lenders, we will use this process to pursue the best possible outcome on behalf of all of our stakeholders, including our employees and our communities. In the face of ongoing depressed conditions in the market for met coal, we must do what is necessary to adapt to the new reality in our industry.”
Meanwhile, the Journal also reported that Alpha Natural is searching for financing for a bankruptcy filing next month. The loan could be between $US300-$US400 million the Journal said, quoting people familiar with the matter.
“Alpha and other coal producers face a depressed market as power plants switch to cheap, abundant natural gas and sluggish global growth has driven the price of coal used in steel making down to an 11-year low,” the Journal wrote.
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