In just under a year, Peabody Energy — which operates Sullivan County’s Bear Run Mine — is emerging from Chapter 11 bankruptcy protection.
Peabody announced on Monday that it has emerged with a transformed capital structure, including new equity that is expected to begin trading today on the New York Stock Exchange under the ticker symbol BTU.
“We believe that ‘The New BTU’ is well positioned to create substantial value for shareholders and other stakeholders over time,” Peabody President and Chief Executive Officer Glenn Kellow said in a news release.
“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,” he continued. “We also have taken significant steps to create a capital structure to succeed through all cycles. Our financial focus will now be on reducing debt, targeting high-return investments and returning cash to shareholders over time.”
Bankruptcy’s impact locally
Peabody filed for Chapter 11 bankruptcy protection last April 13, sending shockwaves through the county.
The most financially impacted entities locally were the Northeast School Corp., Jefferson Township and the county’s government.
The most notable impact?
The Sullivan County Council learned of Peabody’s failure to pay its spring property taxes during its meeting on June 27.
According to the Sullivan County Treasurer’s Office the next day, those 2015/payable in 2016 spring taxes including penalties for Peabody Coal, American Land Holdings and its other entities totaled $899,617.75.
Peabody’s Vice President of Corporate Communications Beth Sutton said later that day they had been made aware of the situation “and the inadvertent effects that the (bankruptcy) filing may have had.”
Sutton stated in early July: “We’ve been made aware of the difficult situation caused by property tax payments missed as a result of our Chapter 11 filing (April 13), and have asked the court to authorize payment of property taxes.”
Then, on July 20, Sutton said in an email to the Times: “We are pleased that the court has approved our motion authorizing payment of certain property taxes, and we are heartened by important jobs and economic benefits that coal mining brings to this area.”
The spring property taxes — reduced to $749,263.25 with the assessed penalties waived — were paid in August. The fall installments were paid in a timely manner.
The NESC board of trustees also dealt with the potential impact on the corporation’s 2017-18 budget at the start of this school year.
NESC Superintendent Mark Baker informed the trustees during their September meeting that Peabody is a major component in tax draws.
Because of this, Baker said, under advice of the Department of Local Government Finance, he used a low estimated assessed valuation of the corporation’s service area: $300 million.
Jefferson Township’s budget was also hit hard because of the property taxes not being paid.
Moving forward
In accordance with the company’s prior announcements and, as required by the plan of reorganization confirmed by the bankruptcy court, the company’s common stock that had been trading under the ticker symbol BTUUQ was extinguished with no value effective at 4 p.m. EDT on Monday.
In the past year, according to the release, Peabody has reduced debt by more than $5 billion from pre-filing levels at March 2016. In addition, Peabody achieved record safety this past year; protected jobs; served global customers; reduced costs and built cash and liquidity; strengthened the Australia platform; accelerated coal mine restoration; provided third-party bonding assurances; and was recognized globally for sustainability.
“We thank our 6,700 employees and all stakeholders for their widespread support for the company and our plan of reorganization,” Kellow said. “We look forward to this next phase in our company’s history. 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.”
In a St. Louis Post-Dispatch story on April 1, it stated Peabody’s reorganization plan set aside shares not only for top executives, but for all the employees.
According to Peabody, Bear Run Mine produced 7.4 million tons of coal in 2016, the economic contribution was $600 million and at the end of 2016, the mine had 535 employees.