St. Louis Post-Dispatch: ELPC’s Howard Learner Talks Peabody’s End to Self-Bonding

Peabody Emerges From Bankruptcy; Stock Trading Resumes Tuesday
April 4, 2017
By Bryce Gray

With $5 billion less in debt and a new stock set to begin trading, Peabody Energy emerged from Chapter 11 bankruptcy Monday, 10 days shy of one year after starting the reorganization process.

The shares will be listed under the ticker BTU — a reference to the British thermal unit, used to measure the potency of energy sources.

“We believe that ‘The New BTU’ is well positioned to create substantial value for shareholders and other stakeholders over time,” Peabody President and CEO Glenn Kellow said in a statement. “Peabody is the only global pure-play coal investment, and we have the scale, quality of assets and people, and diversity of geography and products to be highly competitive.”

When it filed for Chapter 11 last April, St. Louis-based Peabody was one of many bankruptcies in the coal industry. Competition from cheap natural gas had driven down coal prices, but Peabody officials insisted that a badly timed $5.2 billion acquisition of Australian mines in 2011 was a primary reason the company had to file Chapter 11.

“Investors had said to us, we didn’t have an operating problem but a debt problem,” said Vic Svec, a Peabody spokesman.

Now, company executives say the geographic reach of the company’s assets positions it to serve both the U.S. and burgeoning Asian economies.

“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,” Kellow said.

Peabody did face some sticking points in its reorganization process.

Environmental groups voiced concerns about the company’s practice of self-bonding instead of posting a cash bond to cover future cleanup costs. Those groups were appeased when Peabody agreed to replace $1.2 billion in self-bonds with surety bonds.

“This is bringing self-bonding to an end for the world’s largest coal company,” said Howard Learner, executive director of the Environmental Law & Policy Center. “That sends a message across the industry.”

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