Alpha Natural Resources Files Chapter 11 Petitions
The Aug. 3 filings in a federal bankruptcy court in Richmond, Va., cover the company and dozens of its wholly owned subsidiaries. Alpha is the coal producer that bought Massey Energy after the April 2010 explosion at its Upper Big Branch-South Mine.
One of the largest U.S. coal producers, Alpha Natural Resources, filed voluntary petitions Aug. 3 for itself and dozens of wholly owned subsidiaries to reorganize under the Bankruptcy Code's Chapter 11. The company's documents and releases say it hopes to continue normal business operations uninterrupted while in Chapter 11 and to emerge "as an agile company, with a diversified resource base and better petitioned for the future."
Alpha Natural Resources affiliates operate more than 50 underground and surface mines and more than 20 coal preparation facilities in Virginia, Kentucky, West Virginia, Pennsylvania, and Wyoming. It is the company that acquired Massey Energy for $8.5 billion after the April 5, 2010, explosion at Massey's Upper Big Branch-South Mine in West Virginia killed 29 miners. Alpha Natural Resources later announced it would permanently close the mine, and the company agreed in late 2011 to spend $209 million on fines, restitution to victims, and safety improvements in a settlement with federal officials stemming from the explosion. MSHA at the same time imposed a fine of $10,825,368, the largest in its history, as a result of its investigation into the explosion and issued 369 citations and orders -- including for an unprecedented 21 flagrant violations -- to Massey and to Performance Coal Company, a subsidiary that operated the mine at the time of the explosion.
In an Aug. 3 statement, Alpha Chairman and CEO Kevin Crutchfield said, "While a difficult decision, this voluntary Chapter 11 filing is the right strategy at the right time for the future of our business. 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. I am confident Alpha will emerge from this process as a stronger company, with a diversified resource base and better positioned for the future." He said the U.S. coal industry is in an unprecedented period of distress, with increased competition from natural gas, oversupply in the global coal market, historically low prices due to weaker international and domestic economies, and increasing government regulation that has pushed electric utilities to shift away from coal-fired power plants. "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," Crutchfield said. "There is no doubt more uncertainty ahead but also transformational opportunity in the coal sector for those who make proactive, strategic decisions."
The company announced that it has secured an 18-month Debtor-in-Possession financing package totaling up to approximately $692 million, arranged by Citigroup and led by a group of both its first and second lien lenders. This financing package gives the company "significant operational flexibility to successfully reorganize," according to the announcement.
Chapter 11 petitions and other information about the cases are available at www.alpharestructuring.com.