NEW YORK (TheStreet) -- Shares of Foresight Energy (FELP - Get Report) are soaring 50.41% to $1.85 on heavy trading volume Wednesday afternoon as the coal miner and a group of bondholders are close to a deal to avoid bankruptcy, according to sources cited by Bloomberg.
Under the deal, the company's billionaire founder Chris Cline would inject cash to repay creditors, the sources added.
The St. Louis-based company said it extended the terms of forbearance agreements on some of its debt until Friday to provide additional opportunity to engage in talks and negotiations with noteholders and secured lenders, The Deal's Claire Poole wrote in an article earlier today.
Under the agreement being discussed, Cline would buy some or all of the debt and may also invest capital in Foresight's part-owner Murray Energy Corp., the sources added.
A group of the company's senior secured debt holders are seeking a consent fee to agree to any terms, Bloomberg noted. The discussions could still fall through.
About 3.28 million of Foresight's shares were traded by this afternoon compared to its average volume of 189,619 shares per day.
Earlier today, coal mining giant Peabody Energy (BTU) filed for bankruptcy protection amid a slump in coal prices.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of E+ on Foresight stock.
This is based on several weak investment measures, which should drive this stock to significantly underperform the majority of stocks rated by the team.
The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins, generally disappointing historical performance in the stock itself, deteriorating net income and feeble growth in its earnings per share.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: FELP