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James River Coal Co. has filed for protection under Chapter 11 of the bankruptcy law for the second time. The latest filing was on April 7, according to Bloomberg. James River Coal is a mine operator in the U.S. Midwest and Appalachia. Falling coal prices caused the company to idle a dozen mines, resulting in $818.7 million in debt that it was unable to repay without legal protection.
High levels of natural gas production from shale rock in recent years have caused a number of electric utilities providers to switch to gas, resulting in lower demand for coal, the news source explained. Production of metallurgic coal in Australia, which is used in the steel making process, increased the global supply of the resource, further reducing prices. James River plans to continue operating as it reorganizes under court protection, though one or more portions of the company could be sold.
“The coal markets in the U.S. have changed dramatically during the past several years,” Chief Executive Officer Peter Socha said in a statement yesterday, according to Bloomberg.
Coal companies have also suffered as a result of President Barack Obama’s push for stricter greenhouse, Reuters explained.
James River will be entering into a $110 million debtor-in-possession financing facility with several large financial funds, according to the news source. The company said that it will use the funds to support its business, assuming approval by the bankruptcy court. It will also evaluate alternatives, like capital investment through a plan of reorganizing. James River shares traded above $60 in June 2008, but closed at 71 cents on the Nasdaq April 7.
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