Peabody Energy emerges from bankruptcy
St. Louis-based Peabody Energy will again trade on the New York Stock Exchange beginning on Tuesday, as they announced that they're emerging from bankruptcy.
It will be under its old ticker symbol BTU, but company officials are calling it a new day.
“We believe that ‘The New BTU’ is well positioned to create substantial value for shareholders and other stakeholders over time,” said Peabody President and CEO Glenn Kellow in a press release.
The coal company says it shed about $5 billion in debt from the time it filed for Chapter 11 in April 2016.
“We look forward to this next phase in our company’s history,” Kellow said. “Coal remains an essential part of the energy mix, and Peabody is the largest U.S. coal producer while our Australian platform has access to the higher-growth Asia-Pacific region.”
While coal prices have rebounded somewhat over the last six months, many analysts say natural gas remains a strong energy competitor. Charles Dayton is vice president of market analytics at St. Louis-based Doyle Trading Consultants.
“You're competing with something that's very cheap,” Dayton said. “It’s very cheap to build a gas-fired power plant and it's cheap to run one compared to a coal-fired power plant, and you're sitting with coal-fired power plants that are old.”
Still, Doyle said Peabody is emerging with much lower financing costs, especially in its Australian mines.
“Australia was a problem for them. Those are some expensive operations, and they were able to reduce costs pretty significantly there,” he said. “They would argue - and I frankly would not disagree with them - that they are coming out stronger.”
In its press release Peabody officials said its capital structure was designed to withstand cycles.
“Our financial focus will now be on reducing debt, targeting high-return investments and returning cash to shareholders over time,” Kellow stated.
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