Boston, MA 04/24/2014 (wallstreetpr) – Currently, all bondholders are apprehensive about the fate of the U.S. producer, Alpha Natural Resources, Inc. (NYSE:ANR). Especially, they are anxious about their wealth as the sudden sink in the coal prices has made most of the smaller rivals bankrupt. It has spread a warning to the Alpha bondholders because the second leading coal producer has started consuming more money than ever before.
Sorry state of affairs for Alpha
The sad condition of the coal producer is due to costly spending on Massey Energy of around $7.1 million. It was the priciest acquisition in the entire industry. In addition, as the coal rates shot up in 2011, the U.S. coal producer was unable to reap profits due to the slackening of Chinese demand for its supply. Moreover, the sudden increase in supply by the Australian competitors added insult to the injury of Alpha.
Investors are apprehensive
Alpha’s bonds suffered a loss of 9.09% in 2014, which is considerably the highest among all the metallurgical coal manufacturers. The investors, as a result, are now demanding a hike in yield by 9.67% than equivalent Treasuries. They are in need of this hike in order to hold the notes, worth $800 million, pending till June, 2019.
The past three years have been extremely depressing for the coal producers. The coal prices dropped by 66%, resulting in the Patriot Coal Corporation (OTCMKTS:PCXCQ) and James River Coal Company (OTCMKTS:JRCCQ) to land up in bankruptcy. This upsetting situation has sent an alarm to the Alpha’s bond holders, as well.
The experience has put the bondholders under pressure. Alpha recorded losses in the last three years with an outstanding debt of $3.43 billion. The value is considered to be the highest among all the U.S. coal manufacturers. Well, it’s a genuine concern for the bondholders as they are facing huge strain on the expectation of the yield. Let them keep their fingers crossed with the hope that the company hits back.
