Peabody Bankruptcy, page-11

Thanks Bawley. I read what you did but my analysis wasn't as good. You could consider the loans from Yancoal and Peabody to be like equity. It's good that Yancoal has a much bigger share of the loans.

Yancoal is one of the walking dead. If you look at its financial statements, it appears to be in just as bad of shape as Peabody. However, it has a Chinese parent and relationships with unrelated Chinese companies that appear willing to keep it afloat.

I just looked into ownership of Yancoal. Yancoal is owned by Yanzhou Coal Mining Company, which is listed both in China and Hong Kong. Yanzhou is in bad financial shape, although not as bad as Yancoal or Peabody. Yanzhou's owner in turn is Yankuang Group Limited. Yankuang is an unlisted state owned enterprise, owned by the Chinese government. This is good. Actually one of the big reasons iron ore and coal prices are so low is because the Chinese have kept mines afloat that have much higher costs than their competitors in Australia and other places. The good news is Middlemount is likely to have much lower costs than Yankuang's other high BTU, low sulfur coal mines. The bad news is that the Chinese government and banks aren't going to be as likely to keep a money losing mine open if it's Australian jobs that will be lost instead of Chinese.

Anyway we got screwed last year by Asian business practices (i.e. Samsung C&T). Now we're benefiting from them.

I appreciate your analysis. I feel a bit better about the situation.