Peabody Energy Corporation(OTCMKTS:BTUUQ) has moved swiftly higher in recent days since Trump grabbed the US presidency last week; while Trump embraced the coal mining industry, his rival Clinton had promised she was “going to put a lot of coal miners out of business” The stock initially traded as low as $0.545 shortly after landing on the exchange after filling a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Missouri and has seen recent highs over $12 a share, a 2000% return from where it started.
Peabody looks to complete its reorganization within the 12-month period originally contemplated for Chapter 11 cases. Absent meaningful progress in their continuing mediation, the company is not expecting to seek further extensions of the CNTA-decision milestone. BTUUQ is a victim of falling coal prices which lost over half its value in recent years. Current Investors bidding up the price are betting BTUUQ comes out of Chapter 11 with the commons intact.
Peabody Energy Corporation(OTCMKTS:BTUUQ) serves high-growth areas, lighting lives and fueling economies in 25 nations on six continents. Peabody is the only global pure-play coal investment and a global leader in clean coal solutions. From mine to rail, rail to ports and ports to plants… Peabody is fueling the world with energy essential to sustain life and grow economies.
Peabody Energy is the world’s largest private-sector coal company and a Fortune 500 company. The company serves metallurgical and thermal coal customers in 25 countries on six continents. As of December 31, 2015, the company had 6.3 billion tons of proven and probable coal reserves and owned interests in 26 active coal mining operations located in the United States and Australia. BTUUQ operates through Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, Trading and Brokerage, and Corporate and Other segments.
On April 13, 2016, BTUUQ and its affiliates filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Missouri. Peabody is seeking to reorganize U.S. operations in federal court in its hometown of St. Louis, reducing an estimated $10.1 billion in debt, according to court filings.
BTUUQ did $5.6 billion in sales in 2015. The Company employs around 7,100 employees globally. The Company filed for bankruptcy in the U.S. allowing it to leave its Australian assets out of the filing. Peabody spent $4 billion in 2011 to acquire Australia’s MacArthur Coal Ltd. one of the leading producers of metallurgical coal, which is used to produce steel.
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Since filing for Chapter 11 protection in April 2016, the company has completed its business plan, obtained approval on multiple motions regarding the Chapter 11 process and continued to take numerous steps to strengthen the business.
On October 11 BTUUQ announced it has obtained approval from required debtor-in-possession (DIP) lenders to amend several milestones related to the time for a decision on what is known as the CNTA issue; the company’s deadline for filing of a plan of reorganization/disclosure statement; and the date targeted for court approval of the disclosure statement.
The company also received DIP lender consent to an amendment to the intercompany loan facility related to the Australian platform that allows for the potential sale of some Australian assets. Peabody has stated that its Australian metallurgical and thermal coal platforms remain core to the company, though Peabody is exploring potential sale of selected Australia assets as part of its ongoing plan to optimize its portfolio.
The extension approval recognizes the constructive discussions that have been occurring as part of the Chapter 11 process. The company now will file a related submission for court approval. If granted, the extensions will take the CNTA-decision deadline and the deadline to file an acceptable plan of reorganization/disclosure statement to Nov. 23 and Dec. 14, respectively, from the original DIP financing deadlines of Oct. 11 and Nov. 9. The company would also modify the related deadline for receiving court approval for the disclosure statement to Jan. 31, 2017 from its original date of Jan. 8, 2017.
Peabody has informally discussed the concept with other creditors and received favorable feedback on the extensions. The company intends to use this additional time to expand discussions with key stakeholders around issues that, when resolved, would greatly advance consensus on the company’s plan of reorganization. Peabody believes that an extension of these milestone dates is appropriate to provide the best opportunity to bring these discussions to successful conclusion.
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Currently trading at a $260 million market valuation BTUUQ looks as if it may be a turnaround story as the Company navigates the twists and turns of Chapter 11 reorganization. it is still very early to know what common shareholders will end up once the Bankruptcy process is resolved. In the meantime BTUUQ has turned into the biggest runner and volume mover on the OTC as Investors bid up the price over 2000% in recent weeks and shorts get squeezed. We will be updating on BTUUQ when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with BTUUQ.
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Disclosure: we hold no position in BTUUQ either long or short and we have not been compensated for this article.