Alpha has secured an 18-month debtor-in-possession financing package arranged by Citigroup totaling about $692 million. According to the announcement, the current management team is expected to remain in place to lead the company through the bankruptcy process.
CEO Kevin Crutchfield said:
While a difficult decision, this voluntary Chapter 11 filing is the right strategy at the right time for the future of our business. It will enable us to build on the significant steps we have taken over the past several years to restructure our debt and protect our operations. I am confident Alpha will emerge from this process as a stronger company, with a diversified resource base and better positioned for the future.
Crutchfield also remarked that the U.S. coal industry is in an unprecedented period of distress with increased competition from natural gas, an oversupply in the global coal market, historically low prices due to weaker international and domestic economies, and increasing government regulation that has pushed electric utilities to transition away from coal-fired power plants. Crutchfield also emphasized that neither Alpha nor the U.S. coal industry should be thought of in the past tense. While the sector likely will get smaller, coal will continue to play a critical role in providing affordable and reliable electricity and in the production of steel for infrastructure.
Alpha has cancelled its scheduled August 5 filing of second-quarter results and the usual conference call following the release.
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