Fitch: Market Conditions Point to Increased Bankruptcy Possibilities in U.S. Coal Sector

  Fitch: Market Conditions Point to Increased Bankruptcy Possibilities in U.S.
  Coal Sector

Business Wire

NEW YORK -- February 5, 2013

The deep commodity pricing trough and demand destruction could lead to one or
more bankruptcy filings in the U.S. coal industry, according to a new Fitch
Ratings report. Bond prices of two coal producers are trading at deeply
distressed levels.

Fitch's 2013 outlook for the coal industry is negative, driven by a number of
market, pricing, regulatory and macroeconomic conditions. Fitch believes that
2013 will be the trough year for coal pricing. Two coal producers have
significant default risk based on the secondary market trading prices of their
securities.

Since 1994, there have been 11 mining company defaults among producers with
assets of at least $25 million as of the bankruptcy filing date. Three of
these defaults occurred in 2002, driven by the effects of rising operating
costs compounded by fixed-price sales contracts at the time. Patriot Coal
Corp., which filed for bankruptcy in 2012, was more than 11x the size (in
terms of assets) of the next largest defaulted coal company. Fitch's report
provides an update of recent developments in the on-going Patriot case.

The full report 'U.S. Coal Bankruptcies: Future, Present, Past' is available
at 'www.fitchratings.com.'

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: U.S. Coal Bankruptcies: Future,
Present, and Past

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=699672

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Sharon Bonelli (Leveraged Finance)
Managing Director
+1-212-908-0581
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Monica Bonar (Coal, Commodities)
Senior Director
+1-212-908-0579
or
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com
 
Press spacebar to pause and continue. Press esc to stop.