‘Huge Symbolic Significance’ in Peabody’s Fall

first_img FacebookTwitterLinkedInEmailPrint分享Taylor Kuykendall for SNL:Tim Buckley is the Institute for Energy Economics and Financial Analysis’ director of energy finance studies for Australasia. He said that while the “sheer size and profile” of Peabody’s U.S. and Australia operations make “any bankruptcy problematic,” the fall of the world’s top private coal producer would also be highly symbolic of the direction of the industry.“Any bankruptcy of Peabody is of huge symbolic significance — IEEFA works on the premise that technology change will inevitably drive a global electricity market transformation,” Buckley said. “All along firms like Peabody have funded tens of millions of dollars into lobbyists and advertising campaigns denying climate change and trying to use regulatory barriers to favor their self-interest and stop technology change.”Buckley points to gross liabilities of $10.46 billion at the end of 2014 in calling any potential bankruptcy of Peabody “massive” as it has large amounts of debt and other significant unfunded liabilities. He said Australian pension and health liabilities are off-balance sheet and are required to be fully funded by corporate, but in the U.S. unfunded postretirement benefit obligations and net pension liabilities pose a serious problem.Specifically, Buckley noted that in 2014, Peabody had a defined benefit pension and savings plan for one group of staff at $1.0 billion in total and 85% funded. He said a second liability of postretirement health care and life insurance benefits was recorded as an $839.1 million liability, but was zero-funded.“How the board can allow staff to be fully protected and retired employees get zero protection is beyond me,” Buckley said. “So the workers and existing management it seems to me will be pitted against the retired workers. I’m not a lawyer, but that looks at face value like a potential breach of fiduciary duty by the board, given the board of directors was willfully borrowing to pay quarterly dividends until November 2014 when they should have been paying pension liabilities of retired and sick workers.”Buckley also said a bankruptcy process, to be handled in a U.S. court, will pit Australian liabilities against American liabilities, “raising questions of which government will get left to clean up which portion of the inevitable shortfall.” The land reclamation costs, he said, will largely be covered by U.S. and Australian taxpayers.The assets the company owns, Buckley said, face a tough market. He said “almost every global coal mining company” has mines for sale and any potential buyer is flooded with opportunity to buy. However, he said financial institutions are increasingly reluctant to extend credit to the sector.Full article ($): Opponents eye potential ‘massive’ bankruptcy of nation’s largest coal miner ‘Huge Symbolic Significance’ in Peabody’s Falllast_img

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