Reuters: Global Markets: Patriot Coal shares drop along with sector

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Patriot Coal shares drop along with sector May 30th 2012, 15:17 Wed May 30, 2012 11:17am EDT (Reuters) - U.S. coal mining shares fell on Wednesday after Patriot Coal (PCX.N), which is seeking new financing, was downgraded by UBS and CRT Capital Group. In morning trading on the New York Stock Exchange, Patriot stock was down 8.4 percent at $2.38, a day after its chairman took over the position of CEO to focus on re-establishing the company's financial health. UBS cut Patriot's price target to $2.50 from $5.50 and CRT Capital Group downgraded the company's rating to "fair value," citing "heightened uncertainty regarding the company's refinancing status and weak cash flow outlook. "Given the weak coal market, expected negative free cash flow, and deteriorating credit metrics, we find the risk/ reward unappealing," CRT analyst Kuni Chen said in a note. Analysts said Patriot's troubles -- it is negotiating new loan terms after warning that a major customer might default on a contract -- probably dragged down the whole sector. Many of Patriot's mines are located in the central Appalachian coalfields of Virginia, West Virginia and eastern Kentucky, where high costs and low coal prices are making it difficult to turn a profit. Other central Appalachian miners' stock were lower on Wednesday morning. James River Coal Co (JRCC.O) fell 8.7 percent to $2.72 on Nasdaq. Alpha Natural Resources (ANR.N) fell 5.2 percent to $10.93 on the NYSE, Walter Energy (WLT.N) lost 5 percent at $48.81, Consol Energy (CNX.N) was down 3.2 percent at $29.15 and Arch Coal (ACI.N) slipped 3.1 percent to $7.08. Even Peabody Energy (BTU.N), which mines mostly in the Illinois Basin and the Powder River Basin of Wyoming, fell 4.4 percent to $24.10. (Reporting By Steve James; Editing by Kenneth Barry) Link this Share this Digg this Email Reprints

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