Arch Resources announced that it will terminate its proposed thermal asset joint venture with Peabody following the US District Court's ruling to block the transaction. On Tuesday, the court concluded its review and is supporting Federal Trade Commission (FTC) efforts to block the formation of the joint venture combining the companies’ Powder River Basin and Colorado assets.
In a statement, Arch Resources said it has determined that aggressively driving forward with its strategic pivot towards steel and metallurgical markets and simultaneously intensifying its pursuit of strategic alternatives for its thermal assets is the best course of action for the company and its shareholders.
The company said it strongly disagrees with the US District Court verdict and continues to believe that the joint venture would have served the best interests of all stakeholders. Nonetheless, after extensive consideration and discussion, Arch and Peabody have agreed to discontinue legal efforts, given the significant investment of time, resources and expense that would be required to conduct an appeal, Arch said in a press release.
“In the wake of today's decision, we will be intensifying our pursuit of strategic alternatives for our thermal assets – including, among other things, potential divestiture – while evaluating opportunities to shrink the operational footprint at those mines, reduce their asset retirement obligations, and establish self-funding mechanisms to address those long-term liabilities,” said Paul A. Lang, Arch's chief executive officer of Arch Resources. “In the meantime, we will maintain our sharp focus on aligning our thermal production rates with declining domestic thermal coal demand; adjusting our thermal operating plans in order to minimize future cash requirements; and streamlining our entire organizational structure to reflect our long-term strategic direction.”