Dec. 4 (Bloomberg) -- James River Coal Corp., an unprofitable U.S. producer of the fuel, was downgraded one level by Moody’s Investors Service after prices dropped and increased regulatory scrutiny raised mining costs.
Moody’s lowered Richmond, Virginia-based James River’s Corporate Family Rating to Caa1, or seven levels below investment grade, from B3, according to a statement today. Moody’s also said James River’s repurchase of $61.4 million for 39 cents on the dollar announced last month qualifies as a “limited default” under the ratings company’s criteria.
“We expect external factors will preclude it from maintaining credit measures consistent with the B3 rating level,” Ben Nelson, a Moody’s analyst in New York, said in the statement.
Prices and demand for U.S. coal used by domestic power stations have declined during the past two years after some utilities switched to using natural gas, which traded at a decade-low in April as production increased from shale rock. Coal demand was also hurt this year by mild winter weather. James River sells coal to electricity generators from 36 mines located in the Appalachian and Illinois Basin mining regions.
James River fell 5 percent to $3.22 in New York. The shares have fallen 53 percent this year.
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