Reeling U.S. Coal Industry Sends Two More Producers to Bankruptcy
December 03 2020 - 4:45PM
Dow Jones News
By Jonathan Randles
Falling demand for U.S. coal during the coronavirus pandemic
continues to take a heavy financial toll on the industry, tipping
two more coal production companies into bankruptcy.
White Stallion Energy LLC and Lighthouse Resources Inc. filed
for chapter 11 protection Wednesday and Thursday, respectively, in
the U.S. Bankruptcy Court in Wilmington, Del. The companies, which
own mines in Illinois, Indiana, Montana and Wyoming, blamed the
bankruptcy filings largely on low thermal coal prices and declining
coal consumption at U.S. power plants.
The chapter 11 filings are the latest in a string of defaults by
American coal companies, highlighting how a downturn in coal
markets exacerbated by Covid-19 is straining an industry that was
already in decline.
The U.S. power sector consumed 30% less coal in the first half
of 2020 than during the same period last year, according to the
U.S. Energy Information Administration. The coal industry also has
been facing competition from natural gas, a lower-cost fuel
alternative, and the continuing retirement of coal-fired power
plants.
Evansville, Ind.-based White Stallion said in court papers it is
idling its mining operations and had terminated all of its roughly
260 employees just before filing for chapter 11, citing a severe
cash crunch. Before filing for bankruptcy, White Stallion obtained
a $10 million Covid-19 relief loan through the federal government's
Paycheck Protection Program. The company is among hundreds of
businesses that have gone into bankruptcy after obtaining a PPP
loan.
White Stallion said it intends to rehire up to 24 employees to
run the business through bankruptcy and deliver coal to its largest
customer, an Indiana affiliate of Duke Energy Corp. White Stallion
comes to bankruptcy with about $104 million in long-term debt,
according to court documents.
David Beckman, White Stallion's chief operating officer, said
the company is planning to sell its assets quickly in chapter 11.
The company has lined up bankruptcy financing that includes a
January deadline for court approval of the planned sale.
Lighthouse Resources, meanwhile, announced layoffs Thursday at
its Decker mine in Big Horn County, Montana, in the coal-rich
Powder River Basin. The company said it would continue serving
customers while in chapter 11, which "will give it time to consider
options for the best path forward."
Lighthouse also owns Millennium Bulk Terminals in Longview,
Wash., which has been tied up in legal disputes over Gov. Jay
Inslee's efforts to block coal exports out of the state. The
company is also the co-owner of a business that operates a coal
mine in Sweetwater County, Wyo., that isn't part of the chapter 11
case.
Lighthouse laid off about 76 employees before filing chapter 11,
leaving the company with about 91 employees across its business
segments at the time of the bankruptcy, according to court
documents.
"In light of the challenging market conditions and other impacts
on our business from Covid-19, we have been required to reduce
costs and reorganize our business, resulting in the reduction of
our workforce in Montana," Lighthouse CEO Everett King said. "We
are deeply saddened by this impact on individuals, families and
communities."
Both Lighthouse and White Stallion Energy have filed customary
first-day motions in the bankruptcy court to cover ordinary
business expenses as they begin operating in chapter 11.
U.S. Bankruptcy Judge John Dorsey is overseeing the Lighthouse
chapter 11, case number 20-13056, and U.S. Bankruptcy Judge Laurie
Selber Silverstein is overseeing the White Stallion chapter 11,
case number 20-13037.
Write to Jonathan Randles at jonathan.randles@wsj.com
(END) Dow Jones Newswires
December 03, 2020 16:30 ET (21:30 GMT)
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