DOW JONES – Some of the USA’s biggest coal producers, already under bankruptcy protection, may soon have company in chapter 11 from other miners and metals companies, according to a new study from consulting firm AlixPartners.
The report, which looked at nearly 100 mining and metals companies, found that more than half have a “high likelihood” of filing for bankruptcy.
Of 97 companies examined in the report, the consulting firm found 57 with extremely low Z-scores, an algorithm developed by Edward Altman, a former finance professor at New York University’s Stern School of Business, that is used a measure of corporate distress and a predictor of bankruptcy.
Thirty-six coal companies and 21 metal companies, which include miners and processors of materials like iron ore and copper, were found to be extremely distressed. An additional 20 companies had low Z-scores, indicating some financial stress, indicating three out of four companies in the report are encountering either financial distress or stress.
Beset by competition from cheap natural gas and renewable sources, US coal production has plunged to its lowest level since 1981, the Department of Energy said Friday. Three of the nation’s biggest coal companies — Peabody Energy Corp. (BTUUQ), Arch Coal Inc. (ANRZQ) and Alpha Natural Resources Inc. (ANRZQ)–are already operating under chapter 11 protection.
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