Evaluating Contingent Debt

During the 1970’s many coal-fired electric utilities and coal suppliers entered into long term supply contracts many of which lasted for decades. In the context of a corporate restructuring involving the sale of a coal mining subsidiary, CFP was asked to assess the risks that the contract terms of a long term coal supply contract would not be met. A broad market analysis was undertaken that considered changes in market conditions arising from price changes, deregulation, shifts in regulatory scrutiny, and claims that coal supply contracts would not be treated as stranded costs.