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James River works on debt, still suffers loss

ALTHOUGH it took serious steps to reduce debt, Virginia-based producer James River Coal posted a net loss for the September quarter on a soft market.

Donna Schmidt
James River works on debt, still suffers loss

For the period ending September 30, the company reported a net loss of $US20.6 million, widened from a net loss of $3.7 million during the same period last year.

Revenue fell 5% to $288.1 million, though that exceeded the average estimate of $261.7 million.

JRC officials revealed it bought back $53.7 million of its outstanding debt during the quarter, made up of $5 million in principal amount for 2019 senior notes, $19.9 million of the principal for its 2018 convertible senior notes and a $28.8 million principal amount for its 2015 convertible senior notes.

The miner made the repurchases at a cost of $20.9 million, plus accrued interest, leaving with a gain of $22.2 million inclusive of a financing costs write-off of $900,000.

Between the close of the quarter and last month, James River bought back an additional $7.7 million in outstanding debt for $2.9 million.

Chairman and chief executive officer Peter Socha said he was hopeful the industry economy could move forward now the “uncertainty” of the election had been decided.

“We believe that this issue caused a temporary slowdown in economic growth both in the United States and globally,” he said.

“The slowdown in growth, combined with warm weather last winter, has contributed to an unusually weak market for thermal and metallurgical coal. Hopefully, this condition will be corrected shortly.”

The executive said, despite the soft markets, the company was pleased with the performance of its operations over the period following adjustments to operating plans made in response to economic conditions.

“In the financial area, we decided to take the opportunity to reduce our debt at very advantageous market prices due to external events,” Socha said.

“We believe that we were able to successfully balance our desire for a strong and liquid balance sheet with a window of opportunity that was available to us.”

While JRC did not provide guidance figures in its report, it did outline its sales position for the coming year.

Despite signing agreements to ship 1.3 million tons of coal from central Appalachia next year at a per-ton average of $70.63 as of August 8, and 3.4Mt from the same region as of Tuesday at $74.04/t, the latter was still a $5/t reduction from the August averages.

In the Midwest, priced tonnage totaled 2.3Mt at $45.25, down just 10c over its August average.

For 2014, the operator said that as of Tuesday it had 300,000t of CAPP coal priced at an average $75.75/t, and 900,000t from its Midwest mines at $47.64/t.

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