“There can be no assurance that our plan to improve our operating performance and financial position will be successful,” the St. Louis-based producer said in a U.S. Securities and Exchange Commission (SEC) 10-K filing. “We may need to voluntarily seek protection under Chapter 11.”
It also said its potential to operate the company as a “going concern” is of “substantial doubt,” referring to its ability to continue with its current resources.
“As a result of these factors, as well as the continued uncertainty around global coal fundamentals, the stagnated economic growth of certain major coal-importing nations, and the potential for significant additional regulatory requirements imposed on coal producers, among other matters, there exists [that]…doubt.”
The company, which is still working to close its sale of the El Segundo and Lee Ranch mining complexes in New Mexico and the Twentymile operation in Colorado to Bowie Resources Partners, exercised a 30-day grace period on two coupons. They include a $21.1 million semi-annual interest payment on 6.5% senior notes due September 2020, and a $50 million semiannual interest payment on 10% senior secured second lien notes.
The failure to pay is not an immediate default; however, the clock is now ticking on the 30-day grace.
According to Bloomberg and citing a unanimous source, Peabody lender Franklin Resources had been pushing the miner to restructure its debt through a court process; its debt currently totals $6.3 billion. As of February 9, it had $902.6 million in liquidity, $778.5 million of that in cash.
While company officials did not address any concern by the lender in the 10-K, it has outlined a plan for both its domestic and international assets.
“In the U.S., our strategy is to selectively renew, or enter into new, long-term supply agreements when we can do so at prices we believe are favorable,” it said. “In Australia, current industry practice, and our typical practice, is to negotiate pricing for metallurgical coal contracts quarterly and seaborne thermal coal contracts annually, with a portion sold on a shorter-term basis.”