NEW YORK (TheStreet) -- Arch Coal (ACI) stock is plummeting by 25.69% to $1.49 on heavy trading volume on Tuesday, after the company announced it has terminated its private debt exchange program because of ongoing litigation, market conditions and other factors.

The coal company had about $5.15 billion in debt as of June 30, which led the company to offer an exchange debt for senior notes due at a later date.

The exchange agreement has been extended several times, but the company allowed the latest extension to expire last night.

In September, GSO Special Situations Master Fund, which holds Arch Coal unsecured notes and term loans, filed a lawsuit against other lenders in New York to block the exchange, but a judge declined to rule on the case. GSO filed an appeal last week.

"Arch is currently in active dialogue with various creditors with respect to a restructuring of its balance sheet," the company said in a statement.

Separately, TheStreet Ratings team rates ARCH COAL INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate ARCH COAL INC (ACI) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 73.5% when compared to the same quarter one year ago, falling from -$96.86 million to -$168.10 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ARCH COAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ARCH COAL INC is currently extremely low, coming in at 9.16%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -26.08% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$121.30 million or 218.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 3.69 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, ACI has managed to keep a strong quick ratio of 2.11, which demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: ACI