Reacting to difficult market condition and struggling with a loan agreement, Peabody Energy said it is driving structural change throughout its organization. In its recently released third-quarter earnings report, the world’s largest coal producer posted lower sales volumes and weakening prices, and said revenue dropped to $671 million from $1.11 billion. The company also said based on its current outlook, fourth-quarter results will be insufficient to “meet the minimum required net leverage ratio as defined under the revolving credit agreement” by December 31.
“We are now focused on continuing to work with our 2022 noteholders and revolving credit lenders to effectuate a holistic transaction that provides for maturity extensions and covenant relief, while maintaining sufficient operating liquidity and financial flexibility,” Peabody Executive Vice President and CFO Mark Spurbeck said.
Peabody temporarily idled the Shoal Creek mine in Alabama during October to reset the cost structure of the mine. Production is expected to be suspended for the next several months. The company also scaled back production and the workforce at the Wambo Underground in New South Wales, Australia, including temporarily suspending production for 59 days during the third quarter. It idled an excavator fleet at the Moorvale mine in Queensland, Australia, in November citing elevated inventory levels and weak pricing.
Peabody Energy sold 34.7 million tons during the third quarter of 2020, compared to 44.8 million tons during the same period in 2019. Coal sales from the Powder River Basin fell to 23.6 million tons from 30.2 million tons.