NEW YORK (AP) â¿¿ Shares of James River Coal slid 3 percent before Tuesday's opening bell after a trim to its credit rating from Standard & Poor's pushed the miner further into non-investment grade territory.
Late Monday, S&P lowered the rating for the Richmond, Va., company to "CCC+" from "B-." James River's ratings have been under review for a possible downgrade since February.
The ratings service also lowered its issue rating on the James River's $275 million senior unsecured notes to "B-" from "B." The recovery rating remains "2," which means S&P thinks that investors have a 70 percent to 90 percent chance of recovery in the event of a default.
Natural gas prices have plunged to 10-year lows this year and it has become increasingly favored by utilities that use coal or natural gas to generate electricity. Utilities are also preparing for stricter emission standards, driving down coal demand and forcing miners to dramatically scale back production."The downgrade reflects our assessment that market demand for coal has deteriorated such that we expect James River Coal's performance will likely be materially lower than we previously expected," said S&P analyst Megan Johnston of Standard & Poor's Ratings Services. Coal markets will be weak through 2013, Johnston said, which will likely cause the company's liquidity to deteriorate. Last week, Arch Coal Inc. of St. Louis announced plans to close three mining complexes, temporarily idle another, and lay off about 750 workers. Arch said the reductions would trim its thermal coal production by more than 3 million tons annually. Shares of James River Coal Co. fell 10 cents to $2.82 in premarket trading.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV