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Peabody Energy and Arch Coal Gain as Coal ETF Falls



Arch Coal gains

After experiencing heightened volatility in the previous week, Arch Coal (ACI) gained a whopping 205% to $3.85 as the deadlock on the debt exchange offer seems to have resolved. In other news, the George Soros Investment Fund declared that it bought a small stake in the company in 2Q15.

Arch Coal (ACI) is offering debt exchange to investors to increase its financial flexibility to avoid bankruptcy. Some senior lenders were opposing the deal, demanding better yields and terms. Bloomberg Businessweek reported last week that the company “is seeking a compromise with lenders opposing a debt-swap deal.”

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Peabody Energy gains too

After being under pressure for weeks, Peabody Energy (BTU) gained 57.5% and ended at $1.78 last week. Some reports suggested that the company is looking to offload its Australian assets, which it acquired in a $5.2 billion acquisition of Macarthur Coal in 2011. The company’s Australian operations are burning cash heavily, primarily on account of weak metallurgical coal prices, which are at a six-year low. Offloading these assets will reduce the cash burn as well as reduce the leverage if the company repays debt through proceeds.

Other gainers

Cloud Peak Energy (CLD) gained 9.5% to $3.33, while Westmoreland Coal Company (WLB) gained 3.9% to $12.64. Consol Energy (CNX) continued to lose on subdued natural gas prices. The stock lost 2.5% to $12.61.

While major coal stocks gained, the VanEck Vectors Coal ETF (KOL) dropped 4.4%, led by Chinese coal stocks. American stocks account for only 30% of the ETF.


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