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US coal miner Mission Coal files for Chapter 11 bankruptcy

Coal News - Published on Thu, 18 Oct 2018

Image Source: CBS News
Platts reported that Mission Coal filed for Chapter 11 bankruptcy protection Sunday with the US Bankruptcy Court for the Northern District of Alabama, according to court filings. The Kingsport, Tennessee-based company, which produces and markets mostly metallurgical coal, was formed in January through a reorganization that combined and consolidated the operations of Seneca Coal Resources and Seminole Coal Resources. Mission Coal has two deep mines and one surface mine in West Virginia and one deep mine in Alabama with coal qualities varying between low-volatility, mid-volatility and high-volatility coal. Through Sunday, the company had spent roughly $28 million upgrading the mining complexes, according to the filing, but "despite favorable market forces and commodity pricing," Mission was unable to maximize the value of their operations.

According to the filing, mission has roughly USD 175 million in debt, including USD 104 million outstanding under a first lien secured term loan and USD 71 million outstanding under a second lien secured term loan. As of Sunday, the company's total cash balance is about USD 55,000, and does "not have readily available sources of additional financing."

The company said an asset sale through the Chapter 11 process will maximize the ultimate realized value for its stakeholders and its aim is to "conclude negotiations with all key stakeholders, propose a Chapter 11 plan with the support of as many of [the] other stakeholders and creditors as possible, and comply with milestones provided in debtor-in-possession financing to expeditiously and efficiently execute a sale of Mission Coal's assets."

Mission was projected to produce 6.5 million st of coal in 2018, but due to adverse mining conditions and rail/port disruptions, the company lowered its 2018 forecast to 4.5 million st. However, at the end of September, only 2.1 million st of coal had been produced, which "severely limited [Mission's] liquidity and has prevented [it] from implementing [an] operational upgrade program, including fully performing the necessary maintenance on [the company's] mining operations."

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Posted By : Rabi Wangkhem on Thu, 18 Oct 2018
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