Patriot Coal files Chapter 11 bankruptcy
Patriot has taken this action to undertake a comprehensive financial restructuring
St. Louis, July 10, 2012 — Patriot Coal Corp., a producer and marketer of coal products in the Eastern U.S., and most of its units have filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Southern District of New York.
Patriot has taken this action to undertake a comprehensive financial restructuring. Patriot expects its mining operations and customer shipments to continue in the ordinary course throughout the reorganization process.
Patriot believes that the protection afforded by a court-supervised reorganization process, including the ability to access new financing, will provide the company with additional time and flexibility to address its financial challenges and position Patriot for long-term viability and success.
In conjunction with its reorganization, Patriot has obtained a commitment for $802 million in debtor-in-possession financing from Citigroup Global Markets Inc., Barclays Bank, and Merrill Lynch, Pierce, Fenner & Smith as joint lead arrangers. Upon approval by the bankruptcy court, the new financing and cash generated from Patriot's ongoing operations will be used to support the business during the reorganization process.
Patriot's business outlook has been impacted by a number of challenges that are affecting the coal industry, including reductions in U.S. thermal coal demand due to competition from low priced natural gas, challenging environmental regulations affecting the cost of producing and using coal, and weaker international and domestic economies.
The company has reacted to the lower domestic demand by reducing production and increasing sales to the export markets. During recent months, the cancelation of customer contracts, lower thermal coal prices and rising expenditures for environmental and other liabilities have severely constrained the company's liquidity and financial flexibility.
Patriot has filed various motions with the bankruptcy court in support of its reorganization, including requesting authorization to continue paying employee wages and providing health care and other benefits. Patriot has also asked for authority to continue existing customer programs and intends to pay suppliers in full under normal terms for goods and services provided after the filing date of July 9, 2012.