JW Resources is the latest US coal producer to seek reorganization through Chapter 11 bankruptcy.
The privately held company with central Appalachian coal assets filed for Chapter 11 protection yesterday in the US Bankruptcy Court Eastern District of Kentucky - London. The company's filing lists between $1mn and $10mn of assets while liabilities are between $50mn and $100mn.
JW Resources owners bought the Straight Creek and Red Bird thermal coal operations in eastern Kentucky from Xinergy in 2013 and added to the central Appalachian holdings last year by taking over Appolo Fuels' eastern Kentucky and Tennessee properties, which became part of a separate company named Middlesboro Mining. The acquisitions amounted to 81,000 acres containing an estimated 85mn st of proven and probable thermal coal reserves serving utility and industrial customers, as well as three unit train load-out facilities, two preparation plants and three permitted refuse facilities.
JW Resources' largest shareholder Bayside Capital last year described the company as "a world-class Central App coal operation that is well positioned to benefit from the improving utility market and the highly stable industrial market."
But weak demand and falling prices in the past year have been particularly punishing on Central Appalachian coal producers, which typically run the costliest operations in the US.
"Following the Straight Creek acquisition, there has been a decrease in the demand for coal and a dramatic increase in the cost of mining and processing coal, due in part to burdensome governmental regulation," JW Resources said in its bankruptcy filing. The company said it was not successful in raising external capital to stave off the bankruptcy.
Argus' CSX rail 12,500 Btu/lb over-the-counter prompt-quarter physical assessments in the past year shed 26pc.
JW Resources' Straight Creek subsidiary last week laid off 70 workers, joining other central App producers in trimming operations. Xinergy, along with 25 of its subsidiaries, filed for Chapter 11 bankruptcy protection on 6 April, followed five weeks later by Patriot Coal.
JW Resources has engaged consultancy Energy Ventures Analysis to sell all its mining assets as part of the Chapter 11 bankruptcy, through an open auction process. Middlesboro Mining is not part of the Chapter 11 filing and it will not be subject to the auction, Bayside said.
Bayside is the largest owner of JW Resources, with a 74pc share, followed by private investor Lawrence Clark's 19pc share.
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