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On Wednesday, citing the plans of Alpha Natural Resources (NYSE:ANR) to cut production in 2013, Standard & Poor’s Ratings Services placed the ratings of the Virginia-based coal company under review for a possible downgrade.
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On Tuesday, Alpha Natural Resources said it would be cutting production by 16 million tons of coal, eliminating a tenth of its 13,000-person workforce. Of the planned 1,200 layoffs, 400 would be effective immediately by mine closures in Virginia, West Virginia, and Pennsylvania. Production cuts were seen by S&P as a result of weakening prices and demand for both thermal and metallurgical coal.
In response, S&P said it will put the ratings, including the “BB-” corporate credit rating, of the Virginia-based Alpha on credit watch with negative implications. Over the next few weeks, the ratings service will review the company’s performance expectations and decide to affirm or lower the ratings.
According to a statement released by S&P, “The ratings on Alpha reflect our continuing assessment of the company’s ‘fair’ business risk and its ‘aggressive’ financial risk profiles.”
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