NEW YORK (TheStreet) -- Shares of Peabody Energy (BTU - Get Report) are falling by 2.84% to $1.37 in pre-market trading on Friday morning, after the company was hit with a lawsuit from the coal industry's multiemployer pension fund, The Wall Street Journal reports. Fellow coal miner Arch Coal (ACI) is also being sued by the pension fund.
The suit was brought against both companies in an effort to stick them with $800 million of liabilities bankrupt Patriot Coal Corp. may avoid, The Journal noted.
Patriot Coal was formed from assets that once belonged to Peabody and Arch Coal. In May of this year, after the decline in coal prices, the company filed for Chapter 11 bankruptcy protection.
As part of Patriot Coal's restructuring it will leave the pension fund, the United Mine Workers of America 1974 plan, The Journal said. Patriot is also looking to sell some assets without legacy labor-related requirements.
If Patriot leaves the pension group it will be a big hit to the fund, which is underfunded and dependent on struggling coal companies that are its members, The Journal added.
Peabody Energy responded to the pension fund's lawsuit in a statement released on its website last night.
"No Peabody company is signatory to a labor agreement that requires contributions to the 1974 UMWA Pension Plan (multi-employer plan), and the company has no liability to the plan. We believe the pension plan's claims are completely without merit, and we will vigorously defend against them."
that's a lie. the stock is held up by the dividends. If that news is true and that guy isn't making it up, the stock will plummet to $3-4
dude, the entire wall street is insider information. How do you think the hedge funds make money? only .001% ever get caught.
Could be Monday.
can you explain to me how they will beat earning estimate when they have nothing to sell? They have no revenues? And wont' have anything for years. Please do explain how they can beat earnings and what they are selling to earn anything whatsoever?
ANR has $906 Million in cash according to YAHOO statistics,$4.02 BILLION in revenue and $3.22 Billion in debt
BTU has $646 million in cash, $6.6 BILLION in revenue and $6.4 billion in debt.
Meanwhile, Australia’s Department of Industry and Science has estimated that more than 60 percent of U.S. production is at risk of closing.
Which is one reason why Walter is bankrupt, unable to service its debt, why Alpha Natural is trading at 25 cents and Arch Coal at 31 cents -- and why the Aussies are partly to blame.
It doesn't seem the bankruptcy proceedings will help as it just keeps ANR and Walter Energy to keep producing both thermal and metallurgical coal. If they completed shut down and closed their doors, then that would help BTU.
$906 MILLION in cash according to YAHOO Finance $646 Million in cash
$4.02 Billion in revenue $6.6 Billion in Revenue
$3.32 Billion in debt $6.4 Billion in Debt
The challenge for coal companies is twofold. Prices for metallurgical coal -- the type used in steel-making -- have plunged to 11-year lows as China’s economy drags, battering miners’ profits. At the same time, demand for thermal coal for power plants is steadily sliding amid an abundance of shale gas and concerns about climate change.
Earlier this year, natural gas usurped coal as the biggest producer of U.S. electricity for the first time, the U.S. Energy Information Administration reported Tuesday. In April, natural gas produced 31.5 percent of the country’s electricity, while coal accounted for 30.2 percent.
All this comes as coal miners are grappling with debt loads in the billions of dollars -- the result of expansions and acquisitions made in recent years when the coal sector’s outlook seemed brighter.
Alpha Natural Resources had about $3.1 billion in long-term debt as of March 31. The Bristol, Virginia, company is now seeking a loan of up to $400 million to help it through bankruptcy should it file for chapter 11 protection in early August, the Wall Street Journal reported Thursday.
The odd thing is the number of shares INCREASED today compared to yesterday. That is what is odd.