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After Walter Energy, NYSE Stops Alpha Natural Resources Trading

Mayur Sontakke, FRM

Alpha Natural Resources Could Follow Walter Energy into Bankruptcy

(Continued from Prior Part)

Trading suspended

On July 16, the NYSE announced that it suspended trading of Alpha Natural Resources’ (ANRZ) common stock with immediate effect. The exchange has also initiated proceedings to delist the company from the exchange. Continued “abnormally low” stock prices were the primary reason behind the delisting.

The company’s stock began trading in the over-the-counter market starting July 17.

Stock performance

The stock has had an unprecedented fall since the beginning of 2014, when it became clear that the industry scenario may not improve soon. The stock, which opened 2014 at $7.14, tumbled to $1.67 by the end of the year—a 76.6% fall in a single year. The misery didn’t end there, with the stock repeatedly falling below $1 mark since the end of January 2015. In fact, the stock traded below $1 for almost three months before trading was suspended. Alpha Natural Resources closed at 24 cents on July 15, the last day of trading on the NYSE. The stock has been trading on the over-the-counter market since July 17, and it closed at 8 cents on July 22.

Peers

Along with Alpha Natural Resources (ANRZ), Walter Energy (WLTG) and Arch Coal (ACI) have been trading in the penny stock zone for quite some time now. While trading of ANRZ and WLTG is suspended by the NYSE, Arch Coal (ACI) has recently announced a reverse stock split to prop up stock prices and stay listed on the exchange.

Peabody Energy (BTU) has fallen substantially in recent weeks. It closed at $1.39 on July 22 from $7.73 at the start of the year. Only a handful of coal players (KOL), like Alliance Resource Partners (ARLP), Natural Resource Partners (NRP), and Cloud Peak Energy (CLD) are in the safe zone—primarily because they don’t have exposure to metallurgical coal and because they boast cleaner balance sheets. We also expect a wave of consolidation in the coal industry in the next few quarters, primarily driven by ultra-low valuations and the need for a leaner coal industry.

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