Coal-mining company Armstrong Energy Inc. filed for bankruptcy on Wednesday with a plan to turn over ownership of its struggling operations to a competitor and its lender.
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The St. Louis company plans to use the chapter 11 process to transfer the ownership of its five mines and other operations to a new entity owned by Illinois coal company Knight Hawk Holdings LLC and some of Armstrong Energy's noteholders. Nearly all of Armstrong Energy's shares are now owned by energy investor Rhino Resources Partners Holdings LLC.
The terms of the transaction weren't immediately disclosed in documents filed in U.S. Bankruptcy Court in St. Louis.
Armstrong Energy mines for coal in western Kentucky on land that is estimated to have 445 million tons of proven and probable coal reserves, according to a June 30 report. It also operates three coal processing plants and a river dock coal handling and railroad loading facility.
Armstrong Energy joins a long list of coal-mining companies that have turned to bankruptcy facing harsh headwinds within the coal industry, which include the decline in steel production, the conversion of coal-fired power plants to natural gas, which has become a cheap and abundant thanks to the shale boom, and new environmental regulations. Peabody Energy Corp., Alpha Natural Resources Inc., Arch Coal Inc. and Patriot Coal Corp., have all filed for bankruptcy in recent years.
Amid the trouble, Armstrong Energy missed a deadline to pay nearly $12 million to bondholders owed $200 million earlier this year.
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Armstrong Energy executives have taken steps to make sure that the bankruptcy case doesn't interrupt routines for workers and customers.
"We remain firmly committed to serving our customers and to being a good employer by maintaining safe, productive operations as we undertake this process," said Armstrong Executive Chairman J. Hord Armstrong III said in a press release.
Specifically, Armstrong Energy executives have asked Judge Kathy A. Surratt-States for permission to continue providing health-care coverage to workers and paying suppliers on time. The company has hired law firm Kirkland & Ellis and restructuring adviser FTI Consulting, Inc. to handle its chapter 11 case.
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(END) Dow Jones Newswires
November 01, 2017 14:09 ET (18:09 GMT)