The company may join a host of other smaller coal mining companies who have gone bankrupt in the US, but given its vast footprint in Australia, a Peabody bankruptcy could have dire consequences throughout the world.
“There can be no assurance that our plan to improve our operating performance and financial position will be successful," Peabody said in a filing to the US Securities and Exchange Commission. “We may need to voluntarily seek protection under Chapter 11.”
Peabody Energy has now filed its Form 10-K annual report, which includes an opinion from its independent auditors concluding that its current financial path – absent significant improvements, asset sales and other favorable changes – may not be sustainable over the course of the year.
“One practical effect is that this opinion impacts our credit agreement and may result in an acceleration of our debt obligations,” it said.
A planned sale of assets to alleviate pressure on its balance sheet has hit a snag and the company has been forced to miss an interest payment.
Peabody disclosed that it has elected to exercise a 30-day grace period related to interest payments due on March 15.
“This grace period is allowed, and companies using their grace periods may do so for a number of reasons. In our case, we plan to continue to use this time to have conversations with our lenders about our alternatives, while maintaining options around our interest payments,” it said.
With regards to its liquidity, Peabody had approximately $US900 million of available liquidity as of March 11, 2016, consisting primarily of cash and cash equivalents.
“The company continues to address the challenges of the current industry environment by focusing on its three core priorities: operational, financial and portfolio,” it said.
“Within the financial area, the company has dual objectives of preserving liquidity and reducing debt. Actions related to these objectives have included extensive discussions with debt holders, and the company expects to have further discussions with lenders.”
