NEW YORK (AP) â¿¿ Patriot Coal Corp. filed for Chapter 11 bankruptcy protection on Monday as it deals with reduced demand for coal and rising costs.
Patriot said it will continue shipping and mining operations, and it has received a commitment for $802 million in debt financing from Citigroup Global Markets, Barclays Bank, and Merrill Lynch. The St. Louis company is filing for reorganization in the Bankruptcy Court of the Southern District of New York.
Coal-mining companies have struggled recently because U.S. demand and prices for coal are down. Natural gas prices have fallen sharply because of a production boom and weak demand for it during the mild winter. U.S. utilities and other companies have been switching to cheap natural gas from coal to generate electricity.
Patriot says weak economic conditions in the U.S. and overseas also hurt its business, and environmental regulations have driven its costs higher. Patriot said it responded to weakening sales in the U.S. by reducing production and selling more coal overseas, but it continued to struggle with falling prices for thermal coal used for generating electricity and with rising costs.
Patriot also says several customers canceled their contracts.
The company idled several mines this year and eliminated about 1,000 jobs. CEO Richard Whiting left the company in late May amid concerns that Patriot might run short on cash. The company said it was working with The Blackstone Group and the law firm of Davis Polk & Wardwell to secure more financing.
Shares of Patriot Coal lost $1.58, or 72.1 percent, to close at 61 cents.