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Court approves deal allowing Kopper Glo to buy 2 Blackjewel coal operations

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Court approves deal allowing Kopper Glo to buy 2 Blackjewel coal operations

A federal bankruptcy court gave Blackjewel LLC the go-ahead to sell two of its Appalachian coal operations to Tennessee-based Kopper Glo Mining LLC.

Blackjewel, which filed for bankruptcy protection in July and is seeking to sell all of its assets, is selling its Black Mountain and Lone Mountain coal operations in Harlan and Letcher counties in Kentucky and Wise County, Va., according to an order filed Sept. 17 with the U.S. Bankruptcy Court for the Southern District of West Virginia. The deal includes nearly $6.4 million in cash consideration and a royalty with a net present value of $9.1 million payable over six years in annual fixed amounts.

Blackjewel sent many of its employees home without pay after shuttering some of its operations almost immediately after filing with the federal bankruptcy court, and local media reported that coal miners' paychecks bounced that week. Miners staged a protest in late July on train tracks in Harlan County, Ky., effectively blocking a coal train from leaving the area, and have not moved since.

The agreement includes additional funds to the bankruptcy estate to pay unpaid wages to employees at both operations, according to the filing. At closing, the buyer will provide an additional $450,000, and once mining operations restart, it will pay 25 cents per ton of coal mined at those complexes in royalties up to $550,000, which is projected over a two-year period, to pay back the workers.

"Proceeds of the employee royalty shall be directed solely for the payment of unpaid wages to employees of the purchased business," court documents said. "Payments shall be made to holdings or to its assignee, in each case for the benefit of said employees."

Kopper Glo will also assume about $38.4 million in asset retirement obligations.

The debtors contacted at least 40 parties to solicit interest and bids from strategic purchasers and financial investors and ultimately received 18 bids for certain subsets of its assets, including the Black Mountain and Lone Mountain operations.

Rhino Resource Partners LP recently closed on an agreement to buy three of Blackjewel's underground metallurgical coal mines in Virginia. The debtor also notified furloughed Powder River Basin miners in a Sept. 9 letter that the company may call employees back to work, with production potentially ramping up within a few weeks.

Contura Energy Inc. received court approval in late August to buy an eastern metallurgical coal operation separately from Blackjewel's two Powder River Basin thermal mines until it resolves negotiations with the federal government over the western assets.