Bankruptcy coming soon for Arch Coal
Arch Coal lost nearly 90% of its stock price on the New York Stock Exchange (NYSE) in the first eight months of this year.
In a last ditch effort to prevent their stock from being delisted from the NYSE, on August 4, 2015, Arch Coal initiated a one-for-ten reverse stock split to increase the market price per share of their common stock. Delisting procedures are initiated when a stock price trades under $1.00/share for over 30 consecutive trading days. To stay listed with the NYSE, a company is required to maintain certain standards in order to assure investors that any company listed is a credible company.
After the reverse stock split Arch Coal’s shares opened at $1.61. However, the financial maneuver didn’t work. This morning, a mere 10 days after the paperwork was finalized, their stock opened at $1.16/share, losing 28% its value since the split. Most analysts see this as a indication that Arch Coal is heading for bankruptcy, joining Alpha Natural Resources.
What does this mean for the proposed Otter Creek mine and Tongue River Railroad? I’m no expert on stock markets or the financial dealings of large corporations but what seems very clear to me is that Arch Coal will never open and operate a mine in the Otter Creek Valley.
What seems more likely is that they will declare bankruptcy but continue to pursue a mine permit from the state of Montana. If successful, Arch will try to sell that permit in an attempt to recover at least a portion of the millions of dollars they have already sunk into the project, mostly their leasing costs. I’m not sure who would want to buy it considering the substantial community opposition and the hundreds of millions of dollars it would take to construct a greenfield mine.
One can only dream that Arch Coal’s bankruptcy will end this ill-conceived project for good but I don’t think we’ll be that lucky.
Chill, Alex: Arch’s (and the rest of Killer Coal’s) market values result from supply (over-) expansion and market contraction. Hope and prayer are beside the point: conservation, solar and wind generation, evaporative cooling, insulation, LEDs, and wind-wrapping are working!