This year hasn’t been kind to Alpha Natural Resources (ANRZ). The beaten down coal miner has lost more than 85% of its value this year and now trades at 10 cents a share. You’ll also notice a new ticker next to its name, with ANR a thing of the past now that Alpha’s shares have been given the boot by the New York Stock Exchange.
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Against that backdrop, Sterne Agee CRT’s Michael Dudas and Satyadeep Jain decided today was the day to cut Alpha’s rating to Neutral from Buy. They explain why:
We are reducing our rating on Alpha Natural Resources to Neutral from Buy and subsequently suspending our equity research coverage on the company. Our 2015 and 2016 EPS estimates at the time of suspension are ($2.45) and ($2.00), respectively.
On Thursday, July 16th, the New York Stock Exchange indicated that it will begin de-listing proceedings. Also, recent published news reports have indicated that Alpha has entered into discussions with various parties regarding the potential of a chapter 11 bankruptcy filing. Current and expected pricing for the company’s metallurgical and thermal coal shipments have been pressured by current oversupply of coal, which has generated a deterioration of its fundamentals.
While the company indicated total liquidity of $1.8 billion as of March 31 and continues to explore options for capital structure improvement, we believe investor focus will shift toward distressed credit and legal news flow.