Patriot Coal Corporation filed for Chapter 11 bankruptcy this week as it deals with reduced demand for coal and rising costs. Patriot has three operations in Henderson and Union counties in western Kentucky.
The St. Louis-based company says it will continue shipping and mining operations, and it has received a commitment for $802 million in debt financing from Citigroup Global Markets, Barclays Bank, and Merrill Lynch.
“The coal industry is undergoing a major transformation and Patriot’s existing capital structure prevents it from making the necessary adjustments to achieve long-term success,” said Patriot Chairman and Chief Executive Officer Irl F. Engelhardt. “Our objective is to use the reorganization process to address important issues in an orderly way and make the Company stronger and more competitive.”
Coal-mining companies have struggled recently because U.S. demand and prices for coal are down. Natural gas prices have fallen sharply because of a production boom and weak demand for it during the mild winter. U.S. utilities and other companies have been switching to cheap natural gas to generate electricity.
Patriot says weak economic conditions in the U.S. and overseas also hurt its business, and environmental regulations have driven its costs higher. The company idled several mines this year and eliminated about 1,000 jobs.