Wednesday, October 28, 2015

Arch Coal, nation's second largest coal producer, running out of options to avoid bankruptcy

Arch Coal, the nation's second largest coal producer, could be headed toward bankruptcy, Stephanie Gleason and Peg Brickley report for The Wall Street Journal. The company, which has been working on ways to rework its $5.1 billion debt load after an out-of-court restructuring effort fell through, announced on Tuesday that it is abandoning efforts of a debt swap with bondholders "after senior lenders blocked the swap and a New York court refused to intervene."

"Arch appealed the ruling by Justice Saliann Scarpulla of the New York State Supreme Court," Gleason and Brickley write. "However, Arch’s bond exchange offer expired this week, and, rather than trying to extend the timeline, Arch accepted the hand it had been dealt by the courts and on Tuesday announced the exchange offer was off the table."

"GSO Special Situations, a lender and bondholder that had sued to protect the bond swap, has noted in court documents that the failure of the bond swap deal essentially cuts Arch off from the credit markets," Gleason and Brickley write. "The exchange offer would have rewritten provisions in a bond covenant that prevent the company from issuing new secured debt unless it files for bankruptcy." (Read more) (Arch Coal map: Company locations)

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