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Blackjewel requests court approval to sell 6 Ky. coal mines to Black Mountain

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Blackjewel requests court approval to sell 6 Ky. coal mines to Black Mountain

Blackjewel LLC is requesting approval from a federal bankruptcy court to sell six Kentucky coal mines and their related permits and assets to Black Mountain Resources LLC.

Black Mountain was the only entity that made an offer to purchase these assets, according to a Sept. 27 filing with the U.S. Bankruptcy Court for the Southern District of West Virginia. Blackjewel is requesting a private sale without a formal auction process, saying it would be "significantly less expensive and time-consuming" than a public sale, which would not likely include any extra value.

"Indeed, the Debtors ran a fulsome and competitive marketing and sale process, with the input and involvement of their key creditor constituencies, but no interested parties chose to bid on the Purchased Assets until after the auction was concluded and a new marketing process was undertaken," according to the filing. "Proceeding by private sale with respect to the Purchased Assets is appropriate and justified and reflects the economic reality that only one interested party, Black Mountain, made an offer to purchase the Purchased Assets as a going concern."

If the deal is approved, Black Mountain would pay $50,000 in cash immediately for the assets as well as overriding royalty payments over three years, among other stipulations, the filing states. That royalty payment would total $355,000 the first year and $750,000 in both the second and third years.

The agreement includes six mines in Leslie County as well as the related preparation plants, assets and coal permits for 14 permit locations.

Blackjewel is not currently using the assets and intends to convert them into cash to spend on its reorganization process. Black Mountain plans to reopen the mines and operate the business, potentially allowing former employees to be rehired at certain operations. The debtor is requesting an expeditious sale closing to prevent theft and vandalism at the mines, where trespassers have been spotted and may have stolen some property already.

"Without a quick closing, the estates risk losing the value associated with the Purchased Assets to looting," Blackjewel stated. "Therefore, under the circumstances, a private sale is the quickest and most effective way of selling the Purchased Assets."

The bankruptcy court will hold an expedited hearing on the proposed sale at 1:30 p.m. ET on Oct. 2 in Charleston, W.Va.

Rhino Resource Partners LP closed on an agreement with Blackjewel to purchase its coking coal mines in Virginia earlier this month. Contura Energy Inc. agreed to purchase its Powder River Basin assets, but that deal is awaiting an agreement with the federal government.