Pending court approval, Contura Energy Inc. secured the winning bid for three mines sold in the bankruptcy auction of Blackjewel LLC; several other producers bid on the remaining assets of the U.S. coal company.
Stalking horse bidder Contura increased its original $20.6 million bid to about $33.8 million to win the auction of the Eagle Butte and Belle Ayr thermal coal mines in the Powder River Basin as well as the Pax metallurgical coal mine in West Virginia. Successful bids on Blackjewel's assets will result in the company receiving $54.7 million in total consideration, including about $42.9 million in cash, while being relieved of "hundreds of millions of dollars in assumed liabilities, including reclamation obligations."
"The debtors also understand that the successful bidders intend to bring back to work a large number of the debtors' employees as mining operations restart," Blackjewel said in an Aug. 5 filing. "The debtors believe that, under the extraordinary circumstances of these cases, the proposed sales to the successful bidders represent by far the best opportunity to maximize the value of the debtors' assets for the benefit of all parties in interest and return as many employees to work as possible."
According to the filing, the successful bids wipe out more than $300 million of liabilities from Blackjewel's balance sheet while increasing the likelihood of recovery for unsecured creditors.
"At this juncture, the only avenue for avoiding a piecemeal value-destructive liquidation of the debtors' estates is through a sale of the debtors' operating assets as a going concern to the successful bidders," wrote Robert White, managing director of restructuring and recapitalization at Jefferies LLC, the investment banker assisting Blackjewel with its restructuring.
Other top bidders included Knoxville, Tenn.-based Kopper Glo Mining LLC, which bid $7.6 million for Blackjewel's Black Mountain and Lone Mountain coal mining complexes. Other successful bidders for assorted assets of Blackjewel include Rhino Energy LLC, Coking Coal LLC, Tye Fork Coal Co. Inc. and a combined bid from Javelin Global Commodities (US) LP and Blackjewel Marketing and Sales Holdings LP.
Blackjewel's coal mining operations were forced to close with little notice after its initial financing attempts fell apart in the early stages of a bankruptcy reorganization that began July 1. Contura said it plans to reopen its Powder River Basin mines and would make a decision about the Pax mine at a later time. Other bidders' plans for the remaining assets were not immediately clear.
The results are subject to the approval of the U.S. Bankruptcy Court for the Southern District of West Virginia, which is holding a hearing Aug. 5 at 10 a.m. ET.
Blackjewel acquired the Eagle Butte and Belle Ayr mine from Contura in 2017. However, Contura still held the state permits for the Wyoming mines and as stalking horse bidder, provided an $8.1 million deposit toward its purchase to allow Blackjewel to continue to secure its assets through bankruptcy.
Bankruptcy filings also point to a backup bid of $6.0 million for a combination of the Black Mountain, Lone Mountain and certain Virginia assets from American Resources Corp. and Quest Energy Inc. That bid also included a fund for the benefit of eastern U.S. employees in the aggregate amount of $3.7 million.
American Resources CEO Mark Jensen said in an Aug. 4 news release that the company's bid was the most comprehensive and competitive and the only one to include full payment of pre-petition employee compensation for employees of the companies. Its bid offered to take on $200 million in reclamation liability, while other bids only covered a fraction of the reclamation liabilities, Jensen said. Jensen added that American Resources is revising its bid to increase the amount of the offer before the scheduled hearing on the sale.
"Should our company prevail, we will continue to operate a number of the mines and between the current mines and the redeployment of equipment and infrastructure to existing American Resources / Quest Energy mines, we are confident that the job creation would result in a vast majority of Blackjewel's workforce being given the opportunity to be employed by our company," Jensen said.
Sales transactions approved by the court are expected to close on or around Aug. 7, according to an Aug. 4 court filing. Assets that were not sold as part of the sale process will be subject to further discussion and analysis, the company reported.