To say that shares of Arch Coal Inc. (NYSE: ACI) have been volatile Monday morning is not an overstatement. Shares opened at $7.54, down more than 8% from Friday’s closing price. In less than half an hour, the share price spiked to $9.90, up more than 30% before dropping back to an around $9.40 (up 15%) by 10 o’clock. Short after that, it was up to $10.17.

The cause appears to be an extension of the company’s debt swap offer until midnight September 23. The exchange offer was first set to end on August 14 and had been extended to August 28. Arch wants to swap up to $2.38 billion in borrowing for new debt that would include another $404 million in new loans. Existing creditors argue that the swap dilutes their claims on the company’s assets.

In a press release Monday, Arch said it had received tenders for $421 million for its 2020 exchange offer and about $1.07 billion in tenders for the concurrent exchange offer. Creditors who claim to hold about $1.9 billion of the term loans the company wants to exchange instructed the term loan administrator (Bank of America) not to approve the swap. Bank of America resigned as administrator and a replacement has not yet been announced.

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The continued delay in concluding the debt swap appears to have encouraged investors in Arch Coal’s stock. Bidding the stock up indicates either that investors believe the coal business is going to turn around (not likely) and that Arch stock will be worth something again or that Arch will be able to persuade opponents of the debt swap to see things the company’s way and delay the debt long enough to give coal prices a chance to improve.

That latter may be whistling into the wind. Walter Energy, another coal miner and one that filed for Chapter 11 protection back in June, restructured $3.3 billion in debt but was unable to dodge a bankruptcy filing. In documents filed last week, the company’s funded debt totaled $3.15 billion, and Walter will convert approximately $1.9 billion of its secured debt into an unspecified percentage of common stock. Current common stockholders will receive exactly nothing if the proposed plan is approved.

Also according to the Walter filing, first lien notes totaling $970 million are “impaired,” and although a number is not specified, 100% impaired would be a fair guess.

Is Walter Energy a model for Arch Coal? Who knows? But one thing is certain, and that is that the market for coal is not 30% better today than it was on Friday.

In late morning trading, Arch shares were at $9.69, up about 18% on the day, in a 52-week range of $1.00 to $31.70. Shares were subject to a reverse 10-for-one split earlier this month.

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