Contura Energy Pulls Plug On Plans To Go Public
When Alpha Natural Resources went into bankruptcy in 2015, it formed a new company called Contura Energy with some of Alpha’s best coal assets - mines in Wyoming and Appalachia.
Earlier this summer, Contura announced it was going to go public, hoping to expand in the U.S. and beyond. Usually, companies go public and sell shares to raise money and grow their business.
Now, Contura is backing out of that plan.
The company said it’s because of "capital market conditions."
"The company's principal selling stockholders unanimously determined that proceeding with the offering under current market conditions would undervalue the company," Contura said in a statement.
When asked what that actually means, the company would not explain.
Jason Shogren has a theory. He's a professor and economist at the University of Wyoming.
“Either things internally have changed, which we are not privy to, right?" he said. "Or, there’s some sort of external pressure coming in the sense that Wall Street is not as bullish on the recovery of coal as [those at Contura] were.”
Shogren said prior filings show that the company may have put a lot of expectations on the Trump Administration.
"I think they [Contura] were hoping for a bigger rebound given the changes in regulations and given the change in administration, and it's not clear then that Wall Street agreed."
He also said the company's filings show a disconnect in expectations: the company expected investors to gamble on coal. Investors may not have expected coal to be a good bet.
"In this case, they were taking a bet that market conditions would be favorable their way," he said of Contura. "And when they saw that it was not to their liking, they just retreated and come back to fight another day."