Blackhawk Mining LLC reached an agreement with lenders to increase funds available under its debtor in possession financing package due to a potential cash shortfall as the company completes its bankruptcy reorganization.
The company's prepackaged plan of reorganization and financing package eliminated $300 million in secured debt and injected an additional $35 million of liquidity into the business. However, the company said it needed to increase the amount of its financing by $35 million with funding anticipated in the next week.
"The debtors have made progress in reducing operating cash expenditures but not enough to offset the combination of the shortfall in operating cash receipts and increased cost of the restructuring process, and it has become apparent that an infusion of additional capital will be required to fund go-forward operations," wrote Kevin Nystrom, chief restructuring officer for Blackhawk and a managing director of AlixPartners LLP.
Blackhawk also reduced the size of its emergence term loan from $375 million to $85 million. Payments to vendors will continue and customer shipments will go on uninterrupted, according to an Oct. 2 press release from the company. The company filed the revised plan and schedule for emergence with the U.S. Bankruptcy Court of Delaware on Oct. 2 and plans to wrap up the reorganization by the end of October.
"After obtaining court approval to exit bankruptcy in late August, short term weakness in metallurgical and thermal coal markets necessitated that the company and its stakeholders re-evaluate prudent levels of debt and liquidity for the business," said Blackhawk CFO Jesse Parrish in the news release. "Simply put, the deal announced today reduces secured debt by more than 80% from prefiling levels and bolsters the company's cash position at emergence."
The thermal and metallurgical coal producer will emerge with an asset-based loan with capacity up to $90 million, an $85 million first-lien term loan and approximately $25 million in assorted equipment-related debt.
