Arch Coal Inc (OTCMKTS:ACIIQ) Shares Rebound Despite Chapter 11 Restructuring


Arch Coal Inc (OTCMKTS:ACIIQ) shares were up 3.05% on Monday to $0.423 even though the company faces likely bankruptcy. The company has a market cap of $9.00 million at 21.29 million shares outstanding. Shares have been trading in a 52-week range of $0.11 to $10.35, indicating a large decline in value since it filed an amended plan for reorganization under Chapter 11.

Arch Coal is a company that is engaged in the production of thermal and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and steel producers both in the United States and around the world. It operates mining complexes in West Virginia, Kentucky, Maryland, Virginia, Illinois, Wyoming and Colorado.

So far, the company hasn’t provided a lot of details on its reorganization and restructuring plans, although it  stated that the proposition would go in front of the US Bankruptcy Court in Missouri on July 22. The court has ccepted the disclosure statement associated with the restructuring.

Under this plan, the current stock could be cancelled upon the conclusion of Chapter 11, making investors very nervous.

Any recovery to existing stockholders will ultimately be determined in connection with the company’s Plan of Reorganization upon emergence from Chapter 11. We do not expect existing Arch stockholders to receive any recovery at the end of the restructuring process,” indicated Arch Coal in response to questions on outstanding stock.

For now, the company has been unable to provide guarantees on whether or not the stock would continue to trade publicly. Proceedings are expected to last from 12 to 18 months so there’s a considerable amount of uncertainty left, although selling pressure could remain in play for the entire duration. As it turns out, recent reports that Arch Coal was able to earn top safety awards among mines in eight states has propped up share prices but this might be an opportunity to short at a slightly better price.

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