A federal bankruptcy court approved Blackjewel LLC's plan to sell its Powder River Basin assets, leaving Contura Energy Inc. free and clear of its liabilities on those mines.
Blackjewel filed for bankruptcy protection in July and has since sold several of its assets. Contura, which still holds the leases on Blackjewel's Powder River Basin mines, received court approval to buy an eastern metallurgical coal operation separately from the western mines until it can wrap up negotiations with the federal government regarding the Powder River Basin assets.
More recently, Contura announced that it entered into an agreement with FM Coal LLC affiliate Eagle Specialty Materials LLC, which wants to buy and run the Eagle Butte and Belle Ayr coal mines. Such an agreement, if approved, may free Contura from all bonding, reclamation and operational liabilities pertaining to those assets.
In an Oct. 2 hearing in Charleston, W.Va., a federal bankruptcy court judge approved the entities' plans to sell the mines to Eagle Specialty Materials, pending his review of an amended proposed order filed by the parties.
Blackjewel attorney Stephen Lerner said the hearing was a very "significant moment" for the debtors after months of uncertainty and attempts to sell its largest assets, resolve litigation around the company's bankruptcy proceedings and provide money for the debtors' estates. Once the plan is approved and the sale closes, Blackjewel intends to file a liquidating plan and emerge from bankruptcy, he said. The company plans to close on the deal by Oct. 7 at the latest.
Eagle Specialty Materials plans to hire upwards of 500 miners at the western operations and will offer a job to every hourly worker employed by Blackjewel, the attorneys said. While Eagle Specialty Materials will be run under entirely new ownership and officers from the mines' prior owners, some management staff who worked under Contura and Blackjewel will continue working at operations.
Until the buyer can obtain the permits needed for the mines, it will operate as a contract miner under Contura's permits.
During the hearing, Blackjewel and Eagle Specialty Materials representatives, in response to a concern from the U.S. Labor Department, also agreed to amend the agreement to obligate the buyer to cover up to nearly $1.8 million in employee claims, including prepetition and post-petition health claims. The original agreement only stipulated prepetition medical claims, but the department noted the roughly one-month gap between when Blackjewel filed for bankruptcy protection and then terminated the health plans and asked for post-petition claims to also be included as a result.
Hot goods issue
Blackjewel settled its claims with Blackjewel Marketing and Sales, or BJMS, a separate entity from the debtor, Lerner said. Blackjewel will receive nearly $5.5 million in cash from BJMS, which the debtor will then use to settle the "hot goods" violations with the Labor Department. The department filed motions to prevent coal from being transported from Blackjewel's eastern operations until the miners who produced it were paid, the Lexington (Ky.) Herald Leader reported.
Once the hot goods issue in the east is resolved, that coal can be transported to its buyers as well. Blackjewel will also satisfy unpaid employee obligations in the west from other cash sources.
Blackjewel is still working with the Labor Department to finalize the amount of money it owes and will submit an order once the parties reach an agreement. An attorney with the department noted that the resolution does not resolve all matters for the miners, but should resolve the wage dispute.
Blackjewel has previously received bankruptcy court approval to sell two of its Appalachian coal operations to Kopper Glo Mining LLC. Rhino Resource Partners LP recently closed on an agreement to purchase three of its underground metallurgical coal mines in Virginia as well.
Blackjewel requested court approval to sell six of its Kentucky mines that it was unable to auction off to Black Mountain Resources LLC, which intends to restart the operations. The U.S. Department of Interior filed a limited objection to the proposition out of concern regarding the cure amount related to federal coal leases linked to those mines.
A representative for the DOI told the bankruptcy court during the hearing that they would work to come to an agreement over the cure amounts with Black Mountain and file a proposed order reflecting that deal.
