Westmoreland Coal Co., one of the oldest coal companies in America, filed for Chapter 11 bankruptcy this week to deal with mounting debt payments and a worldwide drop in demand. Westmoreland reportedly has $1.4 billion in debt (compared to $770 million in registered assets).
The company, which owns a mine here in New Mexico, has been struggling with lower demand for its products for some time, as renewable energy sources like solar and wind power, as well as natural gas, have taken over a larger portion of the energy market share. Major coal consumers India and China have also decreased their dependence on coal in an attempt to literally clear the air and fight back against the effects of pollution. Westmoreland warned creditors and the Securities and Exchange Commission back in August about the possibility of a future filing because of mounting pressure from creditors.
The Chapter 11 filing is a reorganization and debt restructuring bankruptcy for the company, which has no plans to downsize its U.S. operations or lay off workers at this time. The bankruptcy proceedings instead will refinance a major outstanding loan and increase cash flow. A sister company, Westmoreland Resources Partners, is slated for sale as part of the “business transformation.”
The company announced in a statement that a group of investors – who hold the majority share of Westmoreland’s debt load – could eventually buy the company. Westmoreland is the latest U.S. coal company to file for bankruptcy protection in recent years, following Peabody Energy Corp., Arch Coal and Alpha Natural Resources.