As one major coal company with operations in Letcher County filed for bankruptcy protection this week, the stock values of two other large firms with mines here — Alpha Natural Resources and Arch Coal Inc. — improved after a fourth firm, Consol Energy, reported better than expected coal production.
James River Coal Co. said it filed for Chapter 11 bankruptcy protection as part of its efforts to turn around its business.
The Richmond, Va.-based company says it faces challenges from the weak economy, environmental regulations and competition from natural gas. Utilities are increasingly switching to gas from coal.
James River said Monday that the bankruptcy process will help it shore up its balance sheet. It has secured $110 million in financing to keep its operations rolling, pending court approval, during the restructuring process.
The company, which owns the Blue Diamond Mining complex in Leslie, Perry and Letcher counties and operates a large surface mine in the Carcassonne area, is still considering options such as selling off parts of the business.
Despite James River’s bankruptcy filing, which had been expected for some time, investors appeared to be warming back up to coal stocks this week after Consol Energy reported a stronger-than-expected first quarter of 2014 and said it expects to increase production from 30.1 to 32.1 million tons to as much as 33 million tons for the current year.
Consol’s announcement resulted in a 7.25 percent increase in the stock price for Alpha Natural
Resources, moving its priceper share from $4.60 to high of $5.079 before closing Tuesday at $4.88.
St. Louis- based Arch Inc., which owns Cumberland River Coal Company, saw its stock price grow by 3.19 percent on Tuesday, from $5.5 per share to $5.18.
According to Energy and Environment News, James River CEO Peter Socha blames some of the company’s woes on increased government oversight of coal but also the increased availability of natural gas and the fact that many utilities are shunning Central Appalachian coal.
“We have made a number of large and significant changes to our mine operations and administrative overhead in response to the changes in the coal markets,” he said. “Now we need to adjust our balance sheet and debt structure to align ourselves to the new industry.”
Energy and Environment News also reported that James River said its mining operations and coal shipments will continue as normal during the restructuring process.
“We believe this provides our best course of action to support the best interests of our suppliers, customers, employees and other critical constituents,” Socha said. “We believe we will come out of this a much stronger and a more financially secure company.”
Shares of James River stock fell below $1 in March, resulting in Nasdaq warning the firm it could eventually be delisted.
The price per share for James River stock fell another 63.08 percent Tuesday to 0.2641 cents. It had risen in after-hours trading Tuesday night to 0.2999 cents.