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Here's what's happening today that has landed these two companies on our "stock market crasher" list…
Today's Stock Market Crasher No. 1: James River Coal Co. (Nasdaq: JRCC)
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As its name suggests, Richmond, Va.-based James River Coal processes and sells thermal and metallurgical coal to electric utilities and industrial customers. It operates through eight active mining complexes located throughout the Midwest and Appalachia. Thermal coal is burned to produce electricity, while metallurgical coal is sold to steelmakers.
The company produced 9.5 million tons of coal in 2012. But as utilities increasingly switch over to gas from coal, JRCC has been suffering from a sharp drop in demand and prices.
"The coal markets in the U.S. have changed dramatically during the past several years," Chief Executive Peter Socha said in a statement Monday.
It was forced to idle four Kentucky mines in November. Together, the mines produced 1 million tons of coal during the first nine months of 2013, compared to companywide output of 6.12 million tons, according to JRCC. Before idling those four mines, James River Coal had already idled eight mines as third-quarter production fell 15% compared to a year earlier, according to Bloomberg.
As a result, JRCC petitioned for Chapter 11 bankruptcy protection yesterday (Monday), listing $818.7 million in debt. It continues to search for a buyer or investor.
"We took this action to restructure under Chapter 11 because it will allow us to adjust the balance sheet and improve our liquidity in a controlled and definitive manner," Socha said. "We will also continue to explore and evaluate potential strategic alternatives for the company, such as a capital investment through a plan of reorganization or a sale of one or more portions of the company."
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In its filing Monday, JRCC reported assets and debts in the range of $500 million to $1 billion; its creditors hold more than $460 million in bonds.
Central Appalachian thermal coal averaged $61.74 in 2012 on the New York Mercantile Exchange. Compare to 2013, when it fell 4.6% to average $58.89. So far in 2014, it's priced at $59.96. Meanwhile, the benchmark metallurgical coal contract has fallen to its lowest price in six years ($120 a metric ton) in the second quarter.
"The writing has been on the wall that if prices don't pick up this could happen," Raymond James Financial Inc. analyst Jim Rollyson told Bloomberg. "Metallurgical coal prices have continued to slide, although you've had some recovery going on the thermal side."
The company said it was able to secure a $110 million bankruptcy loan, subject to the approval of the U.S. Bankruptcy Court in Richmond, to fund its operations during the bankruptcy process. In February, The Wall Street Journal reported that James River Coal hired advisers to help come up with beneficial strategies or explore sale options.
JRCC stock currently sits at $0.355 per share as of 1:45 p.m. EDT and has come crashing down 80.08% so far in 2014.
Today's Stock Market Crasher #2: Gigamon Inc. (NYSE: GIMO)
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On Monday, Gigamon, a Santa Clara, Calif.-based traffic visibility solutions company, slashed its outlook for Q1 2014.
Gigamon now projects first-quarter revenue to be approximately $31 million to $31.5 million, compared to the company's previously stated guidance of $34 million to $35 million.
"The revenue shortfall was primarily attributable to one expected large transaction from an existing customer in EMEA [(Europe, Middle East, and Africa)] that did not materialize," the company said in a press release yesterday. "In addition, certain other transactions that were expected to close late in the quarter slipped into the second quarter."
Gigamon said it took a $2.3 million inventory charge related to cancellation of the EMEA contract.
After the closing bell, GIMO shares plummeted 23.85% to $19.95 in extended-hours trading. GIMO stock currently sits at $18.17 per share as of 1:45 p.m. EDT, down 30.65%.
The company will report first-quarter results on April 24 after market close.
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