Arch Coal, one of the U.S.'s largest coal producers, said Monday it had filed for Chapter 11 bankruptcy protection as part of a reorganization plan aimed at trimming $4.5 billion in debt from its balance sheet.
The St. Louis-based company said it had reached an agreement with a majority of lenders under its $1.9 billion first-lien facility to restructure its debt load. Arch Coal said it had entered into a restructuring support agreement with members of an ad hoc group of lenders that hold more than 50% of its first-lien debt.
Arch Coal and the lenders' group have agreed to the principal terms of a Chapter 11 reorganization plan, the company said.
Arch Coal said it expected its mining operations and customer shipments to continue uninterrupted throughout the reorganization process.
"After carefully evaluating our options, we determined that implementing these agreements through a court-supervised process represents the best way to solidify our financial position and strengthen our balance sheet," Chairman and Chief Executive John W. Eaves said in a statement.
The company said it believes it has sufficient liquidity to continue its normal mining activities and to meet its obligations in the ordinary course. Arch Coal said it had more than $600 million in cash and short-term investments as of Jan. 11 and expects to receive $275 million in debtor-in-possession financing from members of the ad hoc group of lenders.
Last month, the company said it would take a 30-day grace period under its indenture agreements with holders to continue discussions with creditors to restructure its balance sheet. The move extended the time period the company had to make a $90 million interest payment that had been due in mid-December without default under the indentures.
Coal burned by power plants faces competition from cheap and relatively clean natural gas. Also, a slowdown in demand from China has pressured the prices of coal used in steelmaking. Major U.S. producers are scaling back, trying to shed mines and laying off employees.
U.S. coal majors Patriot Coal Corp., Alpha Natural Resources Inc. and Walter Energy Inc. filed for bankruptcy protection in 2015.
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--Anne Steel contributed to this article.
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