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Letters to mine employees raise concerns about further Peabody layoffs

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Six trends shaping the industries and sectors we cover in 2021

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Essential Energy Insights - January 2021


Letters to mine employees raise concerns about further Peabody layoffs

Someemployees at Peabody Energy Corp.'sNorth Antelope Rochelle mine near Gillette, Wyo., received letters instructingthem not to return to work this week and attend a meeting on April 1, spurringconcerns that layoffs could soon follow.

Accordingto local news reports, the brief letters offered no details about what wouldoccur at the meeting. However, given recent staff reductions at other local Peabodymines and speculation that the company could soon seek bankruptcy protection,members of the local community remain concerned.

Arepresentative for the Campbell County Chamber of Commerce told S&P GlobalMarket Intelligence that she and others in the community were aware of theletters and the scheduled meeting, adding that she understood that two meetingswould be held April 1 — one in the nearby town of Douglas and the other inGillette.

Sheadded that Peabody had reduced staff at two other local mines over the lastmonth, but it did not release information about how many employees had been letgo. The layoffs occurred at the nearby Caballo and Rawhide mines.

TheNorth Antelope Rochelle mine produced 109.3 million tons of coal in 2015 andemployed an average of a little more than 1,400 employees throughout the year.

Theletters come as speculation grows about the ability for Peabody to avoid filingfor Chapter 11 protection. These concerns were bolstered in mid-March asPeabody included an entry in a securities filing indicating substantial doubtas to whether the company will be able to continue as a going concern andwarned of a potentialChapter 11 bankruptcy reorganization.

Apotential option for avoiding that fate — the sale of assets in New Mexico andColorado — has faced significant challengesas potential buyer Bowie ResourcePartners LP has been unable to secure adequate financing for thedeal.

OnMarch 29, news reports suggested that this setback had forced Bowie to scrap aloan sale that "would've funded its purchase of mines from Peabody EnergyCorp.," effectively dropping the $650 million financing effort. The movehas only served to increase speculation that Peabody could soon file forbankruptcy protection.

Representativesfrom Peabody could not be reached for comment.