Reuters: Global Markets: Patriot Coal slips on liquidity concerns

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Patriot Coal slips on liquidity concerns May 16th 2012, 14:26 Wed May 16, 2012 10:26am EDT (Reuters) - Shares of Patriot Coal (PCX.N) fell for the second day in a row, after the company warned one of its key customers may default on a sales contract, exacerbating concerns about the miner's ability to improve liquidity. Patriot Coal shares fell 7 percent to a three-year low of $3.65. The stock lost about 17 percent of its value on Tuesday. "We now think that the uncertainties surrounding potential financial commitment have increased since the company announced that one of its key customers has potentially defaulted on contractual commitments," analysts at FBR Capital Markets & Co wrote in a note. Patriot Coal signed an agreement last week for a $625 million revolving credit facility and term loan. "While we acknowledge that Patriot Coal may have other avenues to improve liquidity, we are concerned that they may not be favorable for shareholders or may be time consuming," FBR analysts said. They cut their price target on the company's stock to $7 from $8. The company had available liquidity of $338.3 million at the end of March. Liquidity has decreased by about $77 million so far this year. Moody's downgraded Patriot Coal's corporate family and unsecured debt ratings, saying it expects the company's liquidity to deteriorate in weak coal markets. Demand for thermal coal is slipping as utilities are increasingly switching to cheap natural gas. Demand for met coal, or steel making coal, as prices for steel have fallen. (Reporting by Swetha Gopinath in Bangalore; Editing by Viraj Nair) Link this Share this Digg this Email Reprints

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