Fitch gives Arch Coal loans BB-

Fitch Ratings said it assigned a BB-/RR1 rating to Arch Coal, Inc.'s prospective $300 million incremental senior secured term loans.

Net proceeds are expected to be used for the tender offer for the $600 million 8¾% senior notes due 2016. The company is seeking an amendment to the credit facility to eliminate certain financial covenants.

The outlook is negative.

Fitch said Arch Coal benefits from large, well-diversified operations and good control of low-cost production. Globally, Arch Coal is the sixth largest coal producer based on volumes. The company sold 140.8 million tons of coal in 2012 accounting for 14% of the U.S. coal supply.

At least 95% of 2013 expected volumes are committed and priced and more than 60% is committed and priced for 2014, between 45% and 48% of tons are committed and priced. The company has the second largest coal reserve position in the U.S. at 5.5 billion tons, the agency said.

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