At a time when it seems like every industry is getting hit hard by financial crisis, not every company is able to dig, claw, sell, or restructure their way out. Fortunately for Arch Coal Inc (NYSE: ARCH), the company has, in face, successfully completed its financial restructuring efforts to emerge from court protection. Yes, the company now has new equity that can will be available for public trade on the New York Stock Exchange (with the ticker symbol ARCH).
As such, Arch Coal Chief Executive Officer John W. Eaves comments, “Today marks the beginning of a new era for Arch Coal. We are extremely pleased with what we have accomplished during our highly expeditious restructuring process, and are eager to move forward with our compelling plan for value creation. I am confident we have all the pieces in place for long-term success – an extraordinary workforce, cost-competitive assets, a high-quality reserve base, a clean balance sheet and an excellent management team.”
More importantly, perhaps, Arch Coal emerges from this turmoil as the largest metallurgical coal producer and the second largest thermal coal producer in the United States. But along with the title, the company also comes out with a streamlined portfolio of large, modern, and low-cost mines. Arch has a long and consistently proven track record of garnering cash through all phases of every market cycle, showing consistent price growth during bullish times.
Looking at the deal more closely, Arch emerges with upwards of $300 million in cash and a debt level only $363 million, along with a new term loan and new capital leases. As such, the company now has only 7 percent total debt of what they had before the restructuring agreement. With only modest cash requirement expectations and 2017 projected capital spending of only $55 million, Arch will also have a projected debt service of roughly $33 million.
Also, the company will carry third party surety bonds to cover 100 percent of its existing reclamation bonding requirements.
Eaves goes on to say, “We are particularly pleased to be emerging in a resurgent metallurgical market, and look forward to similar strengthening in thermal coal markets in the months ahead. With our enhanced financial foundation and top-tier assets, we believe we are exceptionally well-positioned to capitalize on both.”
Finally, he says, that the company is enthusiastic about a very promising future and their new potential to “drive sustainable value creation” for the company’s shareholders.