Patriot Coal Corp. (PCX), the U.S. fuel producer that has lost more than $7 billion in value, has lined up financing ahead of a bankruptcy filing that may come as soon as today, said two people with knowledge of the matter.
The so-called debtor-in-possession financing is being provided by Citigroup Inc., Barclays Plc and Bank of America Corp., said the people, who asked not to be identified as the process is private.
Patriot is the biggest casualty so far of the slump in the U.S. coal industry, which has seen tens of millions of tons of production cutbacks this year. Coal miners are struggling because of a combination of a warm winter, utilities switching some generating capacity to cheaper natural gas and regulatory moves to curb emissions from coal-burning power plants. U.S. coal use in the first quarter was the lowest for that period since 1988, according to the Energy Information Administration.
Patriot was spun off five years ago by Peabody Energy Corp. (BTU) The shares had tumbled 74 percent this year through July 6 after the company idled some of its mines. The company’s market value peaked at $7.5 billion in 2008.
Patriot, Citigroup, Barclays and Bank of America didn’t immediately return phone calls seeking comment.
The St. Louis-based company said in May it hired Blackstone Group LP as it worked with lenders to refinance $625 million of loans and credit facilities.
Chairman Irl Engelhardt took over as Patriot’s chief executive officer on May 29 after Richard M. Whiting resigned. The company reduced a 2012 forecast for sales of steelmaking coal on May 14, citing a potential default by a customer.
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