In the past two-and-a-half trading sessions, shares of Arch Coal Inc. (NYSE: ACI) have risen nearly 90%, not including the effect of a one-for-10 reverse stock split that occurred after markets closed on August 3. By any measure that is some serious momentum for a stock in an industry that has done nothing but wallow in the slough of despond for the best part of five years.

The primary driver is apparently the belief among shareholders that the coal miner will be able to dodge filing for bankruptcy protection after restructuring some existing debt. The existing lenders had sought to block a debt swap that would cut Arch’s leverage, the amount of interest it has to pay, and remove a covenant that requires the company to maintain at least $550 million in cash and available credit.

Existing lenders have said that the debt swap dilutes their claims on the company’s assets if a bankruptcy filing is forthcoming. In fact parts of the proposed swap have been labeled by the existing lenders as a breach Arch’s existing covenants.

Then George Soros revealed in an SEC filing that his management company had taken a stake in Arch and peer Peabody Energy Corp. (NYSE: BTU). That gave Arch stock a Monday pop, albeit a modest one.

Also on Monday, Arch announced a two-week extension of its debt swap offer. The new deadline is August 28. That raised hopes that negotiations between the company and the existing lenders would lead to a satisfactory resolution that would include the proposed swap and avoid a bankruptcy filing.

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It is hard to see the momentum for Arch continuing, regardless of the outcome of the proposed debt swap. If the company succeeds in persuading existing lenders to go along with the debt exchange deal, about all that changes is the timeframe for a bankruptcy filing. A report last week from Fitch Ratings noted that two-thirds of companies that complete a distressed debt exchange also file for bankruptcy protection within a year.

Arch’s stock was up about 30% in the noon hour on Friday, at $4.36 in a split-adjusted 52-week range of $1.00 to $32.70. The shares closed at $1.47 on Tuesday night, at $2.28 on Wednesday and at $3.35 on Thursday, when volume hit 19.5 million shares. Volume thus far on Friday was more than 6 million.

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