Peabody Energy reorganization plan lacks mine cleanup coverage details

Peabody Energy reorganization plan lacks mine cleanup coverage details
The ticker and stock information for Peabody Energy is displayed at the post where the stock is traded on the floor of the New York Stock Exchange (NYSE) March 16, 2016.

REUTERS/Brendan McDermid – RTSASG7

CHICAGO Peabody Energy Corp (BTUUQ.PK) failed to explain how it will cover future mine cleanup costs in a reorganization plan filed late Thursday, triggering concerns over the company’s use of “self-bonds.”

Under a federal program called “self-bonding,” large miners like Peabody have been allowed to extract coal without setting aside cash or collateral to ensure mined land is returned to its natural setting, as required by law.

The practice came under scrutiny following bankruptcy filings by some of the largest U.S. coal miners because, without collateral set aside for mine reclamation, taxpayers are potentially exposed to billions of dollars in cleanup costs.

Environmental groups have been following the bankruptcy to see whether Peabody, the world’s largest private-sector coal producer, replaces roughly $1 billion of self-bonds with other guarantees, as rival Arch Coal Inc (ARCH.N) did in its October bankruptcy reorganization.

In Thursday’s plan to eliminate over $5 billion of debt to emerge from Chapter 11, Peabody said it will address its “self-bonding reclamation obligations in accordance with applicable laws and regulations,” without providing details.

While a leading U.S. coal regulator has started to toughen rules for guaranteeing mine cleanups, the future of that process under a Trump administration is unclear.

Howard Learner, executive director of the Chicago-based Environmental Law & Policy Center, said the reorganization plan dodged the issue of self-bonding, potentially shifting the risk for Peabody’s environmental cleanup costs onto the public.

“Peabody should be required to live up to its mine reclamation responsibilities and assure that it will not saddle taxpayers with these costs,” Learner said.

Learner said his organization would fight Peabody’s reorganization plan.

Peabody hold self-bonds in Wyoming, New Mexico, Indiana and Illinois, which has expressed concerns about the practice. The company announced a temporary financing deal with the states in July to cover a portion of the risk that it will walk away from mine cleanup obligations while in bankruptcy.

Peabody spokesman Vic Svec said the company continues to fund its reclamation obligations and was in talks with states as well as third-party surety bonding firms over cleanup coverage.

“Now that we have defined a capital structure through our plan of reorganization, we can firm up components of surety bonding,” Svec said.

In a revised business plan on Friday, Peabody raised its target for earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDAR) to $4 billion between 2016 and 2021 from $3.1 billion projected in August, citing a temporary rise in coal prices.

(Reporting by Tracy Rucinski; Editing by Jonathan Oatis)

Source: Reuters

News

BRIEF-Moody's says Euro Area's economic recovery supports stable 2018 outlook

January 15, 2018 mmayha 0

Jan 15 (Reuters) – Moody‘s: * MOODY‘S SAYS EURO AREA‘S ECONOMIC RECOVERY SUPPORTS STABLE 2018 OUTLOOK, DESPITE PATCHY STRUCTURAL REFORM PROGRESS‍​ * MOODY‘S SAYS FORECASTS THAT EURO AREA GROWTH WILL AVERAGE 2.0 PERCENT IN 2018, […]

News

RPT-Germany to include yuan in FX reserves – c.banker

January 15, 2018 mmayha 0

(Repeats to more subscribers) HONG KONG, Jan 15 (Reuters) – Germany’s central bank has decided to include China’s currency, the yuan, in its foreign exchange reserves, Bundesbank board member Andreas Dombret said in Hong Kong […]

News

Singapore files more charges against Shell oil theft suspects

January 15, 2018 mmayha 0

SINGAPORE (Reuters) – A Singapore court on Monday filed additional charges against nine men accused in a large-scale oil theft at Shell’s biggest refinery, the latest development in an extensive investigation in the city-state. The […]

Be the first to comment

Leave a Reply