Largest U.S. Coal Producer Skips Interest Payment, Warns Of Bankruptcy: Stock Plunges 30%
By Tyler Durden
One of the more impressive short squeezes in recent history took place in the first two weeks of March, when the stock of distressed Peabody Energy, the largest U.S. coal producer which employs 8,300 workers, exploded higher from just $2.50 per share at the start of the month to a whopping $6.50 just last week.
Many scratched their heads at this move as nothing fundamental had changed in the company’s deteriorating operations, and its bonds are among the most distressed issues trading currently (with upcoming interest payments as we profiled last night).
Alas Peabody missed its narrow window to sell stock, and things were promptly normalized this morning, when the stock crashed back to earth plunging by 30% to $2.80 in the pre-market, and wiping out virtually all recent gains, after Peabody announced in its just filed 10-K, reported that it may have to join its peers Arch Coal and Alpha Natural in 11 bankruptcy protection, after it delayed $71 million in interest payment due on March 15.
As caught first by Bloomberg, Peabody’s auditor said there’s uncertainty about the company’s ability to keep running as a “going concern,” a 10-K filing with the U.S. Securities and Exchange Commission shows. More importantly, the company reported it will exercise the 30-day grace period on a $21.1 million semi-annual interest payment due March 15 for 6.5 percent senior notes maturing September 2020, and a $50 million payment for the same date on 10 percent notes due March 2022.
Here is the relevant section:
As a result of operating losses and negative cash flows from operations and our election to exercise a 30-day grace period with respect to certain interest payments, together with other factors, including the possibility that a covenant default or other event of default could cause certain of our indebtedness to become immediately due and payable (after the expiration of any applicable grace period), we may not have sufficient liquidity to sustain operations and to continue as a going concern.
We incurred a substantial loss from operations and had negative cash flows from operating activities for the year ended December 31, 2015. Our current operating plan indicates that we will continue to incur losses from operations and generate negative cash flows from operating activities. These projections and certain liquidity risks raise substantial doubt about whether we will meet our obligations as they become due within one year after the date of issuance of this report. We have also elected to exercise the 30-day grace period with respect to a $21.1 million semi-annual interest payment due March 15, 2016 on the 6.50% Senior Notes due September 2020 and a $50.0 million semi-annual interest payment due March 15, 2016 on the 10.00% Senior Secured Second Lien Notes due March 2022, as provided for in the indentures governing these notes. Failure to pay these interest amounts on March 15, 2016 is not immediately an event …read more
Source: Largest U.S. Coal Producer Skips Interest Payment, Warns Of Bankruptcy: Stock Plunges 30%
100% Pure Garcinia Cambogia Extract – Appetite Suppressant – Carb Blocker Capsules – 2100 MG – 90 Caps
Looking for something special ? Find The Lowest Price HERE Posted March 16th, 2016 in Uncategorized.
