Peabody Energy Cutting 235 in Powder River Basin

Peabody Energy Corp, the largest U.S. coal producer, said it would lay off about 235 employees at a mine in the Powder River basin, two weeks after the company flagged bankruptcy risk.

The reductions affect about 15 percent of the workforce at the North Antelope Rochelle mine in the basin straddling Montana and Wyoming, the company said on Thursday.

After reduction, Peabody's Powder River basin operations will employ about 1,500 workers, of which about 1,150 will be at North Antelope, the coal miner said.

Peabody, which agreed in November to sell three mines to Bowie Resource Holdings, said in a regulatory filing on Thursday that the two companies had agreed to waive their termination rights and evaluate alternative payment structures.

Bowie's $650 million loan to finance its purchase of Peabody's mines in New Mexico and Colorado was "temporarily shelved", a source close to the deal said in February.

Falling demand for coal, tougher environmental controls and cheaper natural gas have pushed several big coal miners, including Arch Coal Inc, into bankruptcy in the past year.

Peabody skipped $71.1 million in interest payments this month, kicking off a 30-day grace period.

St. Louis-based Peabody, which employed 7,600 people as of Dec. 31, said it was looking at bond exchanges, cost cuts and waivers to its credit agreements to shore up its finances.

Reporting by Amrutha Gayathri