The petitions were filed with the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond.
The company said it hopes the reorganization will “enhance the company’s future as it weathers a historically challenged coal market,” adding that the filing will help it to emerge as a “financially viable business that is better positioned to compete in dynamic energy markets.”
Alpha’s normal business operations, including production, customer commitments, and wages and benefits for its employees, will continue uninterrupted, officials said, as it is now seeking immediate relief from the Bankruptcy Court.
Additionally, the producer has secured, from Citigroup, an 18-month debtor-in-possession (DIP) package of about $692 million. It is led by a group of the company’s first and second lien lenders.
Alpha Chairman and CEO Kevin Crutchfield called the move a difficult decision, but noted that it is “the right strategy at the right time” for its future.
“It will enable us to build on the significant steps we have taken over the past several years to restructure our debt and protect our operations,” he said. “I am confident Alpha will emerge from this process as a stronger company, with a diversified resource base and better positioned for the future.”
Crutchfield added that, while the coal industry in the U.S. is currently in a period of distress that is unprecedented, neither Alpha nor the U.S. coal industry should be thought of in the past tense. “While the sector will likely get smaller, coal will continue to play a critical role in providing affordable and reliable electricity and in the production of steel for infrastructure,” he said.
“The change and challenges the U.S. coal industry has experienced over the last several years are greater than any in the past three decades. There is no doubt more uncertainty ahead, but also transformational opportunity in the coal sector for those who make proactive, strategic decisions.”
The miner said it will work with all involved parties to complete reorganization and exit Chapter 11 “in the most efficient manner possible,” and added that its entire management team will remain in place throughout the process.
Alpha Natural Resources’ affiliates operate about 50 underground and surface mines and more than 20 coal preparation facilities in Virginia, Kentucky, West Virginia, Pennsylvania and Wyoming.