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One of the largest coal companies in the country has voluntarily filed for bankruptcy under Chapter 11. Cloud Peak Energy has warned of its financial problems in November of last year.
By 2018, Cloud Peak had almost no money, had a debt of hundreds of millions of dollars and was selling less coal than it had in years. The company highlights the weakness of the coal markets, while analysts add that heavy investment in exports has also been a problem. Clark Williams-Derry, director of energy financing at Sightline Institute, an environmental think-tank, said the company's big bets on Asian exports were unsuccessful.
"These bets eventually exploded the company as coal prices in Asia collapsed and Cloud Peak's investments in export projects resulted in losses of hundreds of millions of dollars." he declared.
Andy Blumenfeld, head of market research at Doyle Trading Consultants, a research firm in the energy sector, said Cloud Peak was also facing companies that had settled their debts in previous bankruptcies: Peabody Energy and Arch Coal.
"It's a good operator, but the strategy did not work, mainly because I do not think anyone anticipated the intrusion into their market of so much natural gas and renewable energy." said Blumenfeld.
Bankruptcy comes after almost two full months of debt payment extensions: four in total. Blumenfeld said Cloud Peak was probably buying time for a white knight or was in the process of reaching an agreement with the creditors on the restructuring. Cloud Peak executives have also written that they plan to sell their assets. Blumenfeld said it was telling that the company had filed a voluntary petition in bankruptcy under Chapter 11.
"Which gives the impression that they have an idea of how the sale will unfold," he explained. "They have a plan, but again, it's hard to say what the plan will be."
In a statement, Cloud Peak CEO Colin Marshall said he continues to market his assets. It has two mines in Wyoming and one in Montana. Many other deposits are likely to arrive in the coming days to inform their strategy.
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