Morning Commentary: Alpha Natural trades at 3.75 after filing Chapter 11; other energy names lower

By Rebecca Melvin

New York, Aug. 3 – Alpha Natural Resources Inc.’s 4.875% convertibles traded below the mid-single digits on Monday after the Bristol, Va.-based coal mining company filed to reorganize under Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Virginia.

Alpha said it has lined up a $692 million debtor-in-possession facility with an 18-month maturity.

Citigroup is the arranger for the DIP loan, and the facility will be led by a group of first- and second-lien lenders.

The Alpha Natural 4.875% convertibles were quoted at 3.75 bid, 4 offered, market sources said.

Elsewhere, Whiting Petroleum Corp.’s convertibles were trading at 86.75 versus an underlying share price of $20.05, with oil prices lower again.

West Texas Intermediate crude was down 1.5% in the early going and Brent crude was down 2.62%, a New York-based trader noted.

Chesapeake Energy Corp. was also weaker again, with the Chesapeake 2.25% convertibles quoted at 80.5, which was down another point from Friday’s last price.

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