Alpha Natural Resources, Inc., one of the largest and most regionally diversified coal suppliers in the U.S., and certain of its wholly-owned subsidiaries have filed for voluntary Chapter 11 under the U.S. Bankruptcy Code, according to the press release published in PR Newswire.
The filing of Chapter 11 cases was authorized by Alpha's Board of Directors.
Reuters adds that the filing of bankruptcy comes on the heels of President Barack Obama's expected unveiling of tough new measures to cut greenhouse gas emissions from coal-fired power plants.
Kevin Crutchfield, chairman and CEO of Alpha, noted that several factors have put the U.S. coal industry in distress, according to the press release.
"The change and challenges the U.S. coal industry has experienced over the last several years are greater than any in the past three decades," he said.
Increasing competition from natural gas, historically low prices in coal, due to "weak international and domestic economies" and an increasing "government regulation that has pushed electric utilities to transition away from coal-fired power plants," are the challenges that Crutchfield mentioned.
He added in the press release that, the U.S. coal industry and Alpha shouldn't be counted out yet.
"There is no doubt more uncertainty ahead, but also transformational opportunity in the coal sector for those who make proactive, strategic decisions," he said.
Reuters adds that Alpha, which is the world's third-largest supplier of metallurgical coal used in making steel, has also been hit by the slowdown in China.
Crutchfield added in the press release that, though they will be filing for bankruptcy, the move is about positioning the company for the future as it endures the current challenges in the coal industry.
"While a difficult decision, this voluntary Chapter 11 filing is the right strategy at the right time for the future of our business," he said. "It will enable us to build on the significant steps we have taken over the past several years to restructure our debt and protect our operations."
Alpha stated that it has secured an 18-month Debtor-in-Possession financing package totaling up to approximately $692 million.
The company also said that it expects to work with all key constituencies to reorganize and exit Chapter 11 in the most efficient manner possible. The current management team is expected to remain in place to lead the company through the bankruptcy process.
The press release also states that Alpha today launched www.alpharestructuring.com. It is a website that will provide stakeholders with information about the bankruptcy process and legal filings made with the Court.
