Moodys Investors Service Inc. expects U.S. coal producers
to cut production, sell assets and restructure debt to improve
their liquidity in the near term.
for U.S. coal producers will remain depressed throughout next
year, it said in an Aug. 8 report, noting that companies with
the strongest liquidity will be best positioned to deal with an
extended period of weakness.
"We expect producers
to continue to take actions to improve their liquidity in the
near term," Moodys assistant vice president Ben Nelson
said, "including additional production curtailments to limit
cash burn, asset sales and capital market activities to add
liquidity and in some cases additional debt restructuring to
align balance sheets for what we expect will be a protracted
Peabody Energy Corp.
has the strongest liquidity, with more than $500 million in
cash and $1.4 billion available under its revolving credit
facility, according to Moodys.
"Consol Energy (Inc.),
which has not yet had the payoff it seeks from shale
development, has a $2-billion revolving credit facility and can
sell assets if necessary," Moodys vice president and
senior analyst Anna Zubets-Anderson said. "Although Alpha
Natural Resources (Inc.) and Arch Coal (Inc.) both face falling
earnings and escalating leverage, each holds roughly $1 billion
in cash and marketable securities. Alpha and Arch can weather
an extended downturn more easily than others."
AMM sister publication Steel First in
February that they expect to see more mine idlings, sell-offs
and closures in 2013 due to scant demand, squeezed
metallurgical coal profit margins and uncertainty in the global
A version of this article was first published by AMM sister
publication Steel First.