James River Coal idles more mines to preserve cash

Reuters

* Four eastern Kentucky mines idled, 200 staff on furlough

* Third-quarter liquidity down 35 pct from second quarter

* Adjusted loss $1.41 per share vs est loss $1.22

* Shares fall as much as 17 percent (Adds CEO and analyst comments, compares with estimates;updates shares))

Nov 7 (Reuters) - James River Coal Co idled fourmore mines in Central Appalachia and temporarily laid off about200 employees as the company looks to shore up its precariouscash position amid weak coal prices.

The company's shares fell 17 percent to $1.58 after the coalminer also posted a bigger-than-expected quarterly loss and itsshipments declined.

"The balance sheet continues to be the critical issue towatch for James River Coal," Simmons & Co analyst Bill Herbertsaid in a note.

James River Coal's available liquidity plunged 35 percent to$71 million as of Sept. 30, from $108.8 million as of June 30.

If the liquidity were to fall below $50 million, it wouldamount to a covenant breach, according to terms of the company'scredit facility.

"I feel relatively optimistic about where we are right nowbut at the same time I also need to be cautionary that a lot ofagreements need to be reached and a lot of negotiating thatstill has to take place," Chief Executive Peter Socha said on apost-earnings conference call.

He said the company was in talks with current debt holdersand also other potential investors.

Tuesday's idling brings to seven the number of James RiverCoal mines shut since September, as U.S. coal miners alsostruggle with tougher environmental regulations.

James River Coal idled production at three mines in CentralAppalachia in September, and last month said about 525employees, who were put on furlough, will be laid off in thefourth quarter. ()

Thermal coal prices have been hit as power companies opt forcheaper natural gas to generate electricity, while weak steeldemand and excess supplies have weighed on price of steel-makingor metallurgical coal.

James River Coal also has mines in southern West Virginiaand southern Indiana.

The four mines at its Buckeye operations in eastern Kentuckyin Central Appalachia produced about 1 million tons throughSeptember, or about 16 percent of total output during theperiod.

Shipments in the third quarter fell 34 percent to 2.1million tons, while coal prices fell about 18 percent to $68.68per ton.

Excluding one-time items, the company posted a loss of $1.41per share, while analysts expected a loss of $1.22 per share,according to Thomson Reuters I/B/E/S.

The company's net loss widened to $25.5 million, or 73 centsper share, from $20.6 million, 59 cents per share, a yearearlier.

James River Coal's shares recouped some of their losses totrade down 10 percent at $1.71 by early afternoon. More than 2.3million shares changed hands by that time, more than double its10-day average.

The shares have nearly halved in value this year.

View Comments (3)