Global coal producer Peabody Energy has filed for bankruptcy protection in the US as it sits on $10.1bn debt amid slump in commodity prices.
Through the chapter 11 bankruptcy protection, the firm plans to reduce its overall debt level, lower fixed charges, improve operating cash flow while continuing to operate under the protection of the court process.
According to the court document it has estimated assets of $11bn and $10.1bn liabilities by the end of 2015.
Peabody president and CEO Glenn Kellow said: "Through today’s action, we will seek an in-court solution to Peabody’s substantial debt burden amid a historically challenged industry backdrop.
"This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future."
The privately-owned coal producer said that the process, however, does not include Australian entities and will continue Australian operations as usual.
To help fund operations during bankruptcy, the firm agreed to $800m in debtor-in-possession financing from both secured and unsecured creditors led by Citigroup. The financing is subject to court approval.
Additionally, Peabody terminated its planned sale of New Mexico and Colorado assets after the buyer was unable to complete the transaction.
Peabody said that coal, which currently fuels approximately 40% of global electricity, to be an essential source of global electricity generation and steel making for many decades to come.
In March, the firm has warned that it may have to file for bankruptcy protection after it failed to pay an interest of $70m on its debt.
Image: Coal fuels approximately 40% of global electricity. Photo: courtesy of dan/ FreeDigitalPhotos.net.