Coal provider faces more financial challenges

One of the providers of Wyoming coal to Oklahoma coal-fired electric generating plants has ended its Credit Agreement with a bank after the amount of borrowing capacity was reduced to about $16 million. It is the latest in a series of financial moves that some say portend a gloomy future for the company.

Cloud Peak Energy, one of the nation’s largest coal producers in the Powder River Basin said it was ending its agreement with PNC Bank, National Association.  The agreement, initiated in February of 2014 will officially be terminated Nov. 15.

It was in September when the Credit Agreement availability was reduced to $16.2 million of borrowing capacity. At one point, the agreement was up to $400 million.  Cloud Peak announced it has $109.5 million in cash and cash equivalents on hand and no outstanding borrowings. It also indicated it has not historically used the Credit Agreement as a source of working capital and had no plans to draw on the agreement.

It’s only the latest financial challenge for the company that has seen its stock price peak four years ago at $24 while this week, it traded for just $1.44.

The company is also facing a credit crunch because it owes $290 million to bondholder within three years. Some observers believe the payback will be hard to meet because the company generated only $9 million in cash over the last year.

As one observer put it, Cloud Peak might have to refinance or declare bankruptcy.