As it continues to move ahead toward emerging from Chapter 11 bankruptcy, Peabody Energy said August 10 that the business plan that will set the basis for its plan of reorganization has been approved by its debtor-in-possession (DIP) lenders. In its plan, Peabody has projected sales volumes of 168 million tons this year. It will rise to between 194 and 197 million tons annually between 2018 and 2021. Revenues will hold stable at $4.4–$4.6 billion.
The company is seeking to implement a “diversified platform” that will generate positive cash flows across all of Peabody’s business cycles while also producing returns to fuel its future growth initiatives. “Within the Americas, this includes an unmatched portfolio of assets in the PRB and Illinois Basin that continues to create value in the face of reduced coal demand,” it said. “Within these basins, the company, among other things, looks to drive lower costs through synergies and provide greater value, whereas in the Southwest and Colorado, the company anticipates managing for cash generation.”
Shearer operators cut coal at Peabody Energy’s Twentymile longwall mine.
In Australia, the plan’s focus reinforces its core interests, both metallurgical and thermal. “The company anticipates a smaller but more profitable platform focused on high-quality products and/or top-tier assets to capitalize on higher growth in Asia,” adding that a reduction of metallurgical volumes over the plan’s five-year life is being contemplated with the assumption of strong Australian currency and no “major uplift” in pricing.
The company is hoping to enter its reorganization plan by the end of the year.