James River Coal Company faces changing dynamics in the coal industry and has filed for bankruptcy protection, in order to restructure its balance sheet and continue operations. In other news, CONSOL energy reported its first quarter production data and outlook for the full year James River Coal Files For Bankruptcy Protection Yesterday, James River Coal Company (JRCC) as well as its 33 subsidiaries filed for Chapter 11 bankruptcy protection under the US Bankruptcy code in the US Bankruptcy Court for the Eastern District of Virginia. The stock price of the Richmond, Virginia-based company plummeted 48.3% in after-hours trading to $0.37. James River is involved in the production of thermal and metallurgical coal. The company has been hampered by lower demand of thermal coal from domestic electric utility companies in recent years. Electricity production has shifted from thermal coal to natural gas as a consequence of the shale gas boom, which has caused natural gas prices to decline making it a more viable option for utility companies. The company generated around 44% of its total revenues of $1.1 billion from sales of thermal coal to electricity producers in fiscal 2012 (FY12; ended December 31, 2012), with the rest coming from industrial and other companies.
I can't say that it is much of a surprise that a coal company is going under. Coal is a horrible source of heating in the house. I can't see why anyone would even want it.
With the focus on new energy sources and the negative press that coal has received, demand will continue to decrease. This is not a good time to invest in coal companies. If one of the companies decide to play smart and buy-out competitors like James River Coal Company, it may be worth the while to invest. Profitable coal companies will have to monopolize the industry to remain profitable. Can not see the smaller companies surviving for long.
