Peabody, which is headquartered in Missouri, maintained that its mines and offices would remain open, and that its Australian holdings would not be included in the Chapter 11 filing. The company attributed its financial woes to “a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas, and ongoing regulatory challenges.” These market forces have made it difficult for Peabody to repay its debts after the company’s 2011 takeover of Australian rival Macarthur.
Peabody expects to stop trading company shares on the New York Stock Exchange — shares that have lost 99 percent of their value since their peak in 2008.
The bankruptcy declaration has drawn positive reactions from the environmental advocacy community. “Peabody Energy’s bankruptcy should serve as a wake-up call to anyone promising that coal’s glory days will return,” Sierra Club’s Mary Anne Hitt said in a statement. Coal’s contribution to climate change is significant, and the bankruptcy comes less than a year after an investigation undertaken by New York Attorney General Eric Schneiderman found that Peabody had been misleading its investors about the impact of climate change.
Peabody has been in business since the 1880s, when its founder, Francis Peabody, first sold coal out of his mule-drawn wagon in Chicago. The company weathered the Great Depression and became the world’s largest publicly held coal company during the 1970s oil embargo. Peabody employs nearly 8,000 people, and it’s unclear if there will be layoffs in the wake of the Chapter 11 filing.
Despite taking a pay cut last year, former Peabody CEO Gregory Boyce still had a base salary exceeding $1 million per year, and his successor, Glenn Kellow, has a base salary of $855,000 per year, which is 16 times greater than typical family income in the United States.
Peabody’s Chapter 11 filing is just the latest in a series of coal industry bankruptcies that have affected more than 50 companies since 2012. Producers accounting for 45 percent of coal output have filed for bankruptcy in the current industry downturn, according to 2014 US government figures. Notably, the second-largest coal producer in the United States, Arch Coal, filed for bankruptcy two months ago, and the nation’s fourth-largest coal producer, Alpha Natural Resources, declared itself bankrupt last August, though not preventing the company from shelling out $11.9 million in bonuses to its executives.
Read more at The World’s Largest Private Coal Company Just Filed for Bankruptcy
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