Tough Market Hurting Cloud Peak Cash

Jul 1, 2019

Credit CC0 Public Domain

The recently bankrupt coal giant Cloud Peak Energy is struggling to find short-term cash. The company initially got a loan for up to $35 million to stay operational through the bankruptcy process, but that well seems to have run dry.

Tim Hynes, head of North American Research with Debtwire, a news, data and analytics service, said the company is seeking additional financing from secondary lien bondholders, but isn't having any luck finding the money. Cloud Peak extended the deadline by several weeks to July 18.

"Generally, when you do something like that you know there's enough interest to get it done. I was a bit surprised that they didn't, they had to extend it. It's not a good sign at all," Hynes said.

He said it may be hard to rustle up financing because the coal market is increasingly weak.

"Their export market, which they kind of believe that would keep the company going, is collapsed so they can't profitably export coal. And then secondarily natural gas has fallen just due to supply and demand issues," Hynes explained.

The Arch Coal-Peabody Energy consolidation doesn't bode well for the company either. Hynes said analysts thought one of those two companies could be looking at picking up Cloud Peak assets. He said that's unlikely now.