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Peabody coal company ready to file for bankruptcy

(Nathan Bomey)  Coal producer Peabody Energy warned Wednesday that it may have to file for bankruptcy as the commodity loses ground to cheaper, cleaner alternatives.

Peabody said in a U.S. Securities and Exchange Commission filing that it expects it “will not comply with our financial covenants” on March 31 — which is often a precursor to bankruptcy.

The company said it has held discussions with lenders regarding potential debt-for-equity swaps or new financing.

But “sustained depressed” coal prices have battered the bottom line, along with exposure to the bankruptcy of former subsidiary Patriot Coal and retiree benefit costs, according to the filing.

Peabody shares (BTU) plummeted 46% in pre-market trading to $2.15. Two years ago, the stock hit a high of $299.10 in the first quarter of 2014.

The company has posted four consecutive yearly losses, including a $2 billion net loss in 2015 as revenue fell 17% to $5.6 billion.

A 40% decline in natural gas prices in 2015 and regulatory pressure on carbon-emitting coal plants are hastening a transition from coal-powered electricity to gas-powered plants across the country, according to the Energy Information Administration.

Coal generated 33% of U.S. electricity in 2015, down from 39% in 2014, according to the U.S. Energy Information Administration.