Peabody tries to reassure mine employees
March 16, 2016
Steamboat Springs — Peabody Energy, owner of the Twentymile Mine in Routt County, delayed paying $71.1 million in debt payments Tuesday, fueling speculation that the largest coal producer in the United States is headed toward bankruptcy.
The news came from a 10-K annual report filed Wednesday morning with the Securities and Exchange Commission. Peabody’s stock price dropped 45 percent Wednesday to $2.20.
The company on Wednesday afternoon shared an email sent to employees by Peabody Executive Vice President and Chief Financial Officer Amy Schwetz.
Schwetz wrote that the company has chosen to exercise a 30-day grace period related to the debt payments.
“This grace period is allowed, and companies using their grace periods may do so for a number of reasons,” Schwetz wrote. “In our case, we plan to continue to use this time to have conversations with our lenders about our alternatives, while maintaining options around our interest payments.”
If Peabody does not make the debt payments, the company will be in default.
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Schwetz tried to reassure employees and said that business was moving forward as normal.
“Still, we recognize these events may cause uncertainty or contribute to speculation,” Schwetz said. “We will continue to provide updates as appropriate.”
The annual report includes a “going concern opinion” from Peabody’s independent auditor stating that, absent significant improvements, asset sales or other favorable changes, the company may not be sustainable over the course of the year.
In November, Peabody announced plans to sell Twentymile Mine and two mines in New Mexico to Bowie Resource Partners for $358 million. Peabody expected the deal to close at the end of this quarter, but the sale has not yet been completed.
During an earnings report Feb. 11, Peabody CEO Glenn Kellow said Bowie was still arranging financing. Some media outlets reported the deal had hit a snag.
Peabody and other coal companies have come under fire recently by environmental groups.
WildEarth Guardians has threatened to sue Peabody. It claims Peabody no longer has the resources to clean up its spent mines.
"The writing's on the wall; there is no future for coal," said Jeremy Nichols, WildEarth Guardians' climate and energy program director, in a news release. "It's time for Peabody to acknowledge the realities of climate change and the need to keep coal in the ground."