Patriot Coal back in Chapter 11 bankruptcy, negotiating sale of assets

By Caroline Salls

Pittsburgh, May 12 – Patriot Coal Corp. filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the Eastern District of Virginia.

According to a news release, the company is in negotiations for the sale of substantially all of its operating assets to a strategic partner. Patriot Coal said it is also engaged in ongoing discussions with key stakeholders as it evaluates a range of strategic alternatives to maximize the value of its assets.

The company said it intends to complete its review of strategic alternatives and present a value-maximizing restructuring plan to the court as quickly as possible.

Patriot Coal said it expects its customer shipments and mining operations to continue in the ordinary course during the restructuring process.

“In light of the challenging market conditions, and after a comprehensive review of our alternatives, the board and management team have determined that this process represents the best path forward for Patriot and its stakeholders,” president and chief executive officer Bob Bennett said in the release.

This is Patriot Coal’s second Chapter 11 filing in three years. The previous case was filed in July 2012. The plan effective date was Dec. 18, 2013.

In conjunction with the bankruptcy filing, the company received a commitment for $100 million in debtor-in-possession financing led by a consortium its secured debtholders to support its continued operations.

Patriot Coal said the DIP financing, combined with cash generated from ongoing operations, will provide sufficient liquidity to support the business during the restructuring process.

According to court documents, Patriot Coal has more than $1 billion in both assets and debt.

The company’s largest unsecured creditors are:

• Peabody Investments Corp. of St. Louis, with a $4.86 million trade debt claim;

• Joy Global Underground of St. Louis, with a $4.56 million trade debt claim;

• UMWA Health & Retirement Funds, based in Beckley, W.Va., with a $2.29 million trade debt claim;

• Mine Safety & Health ADM, based in St. Louis, with a $1.48 million trade debt claim;

• Cecil I. Walker Machinery Co. of Charlotte, N.C., with a $1.38 million trade debt claim;

• Suncrest Resources of Kingsport, Tenn., with a $1.23 million trade debt claim;

• Phillips Machine Service Inc. of Beckley, W.Va., with a $1.21 million trade debt claim; and

• Rish Equipment Co. of Bluefield, W.Va., with a $1.02 million trade debt claim.

The company is represented by Kutak Rock LLP.

Patriot Coal is a Richmond, Va.-based miner, producer and seller of thermal coal. The Chapter 11 case number is 15-32450.

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