Navajo Transitional Energy Co. LLC emerged as the winning bidder for substantially all of Cloud Peak Energy's assets, following a competitive auction as part of its Chapter 11 process.
NTEC offered a consideration of $15.7 million cash payment at closing, a $40 million second-lien promissory note and a five-year term royalty on future tons produced for the assets, which include the Spring Creek, Cordero Rojo and Antelope mines and the Sequatchie Valley reclamation project.
The company, owned by the Navajo Nation, also agreed to assume pre and post-petition tax liabilities and federal and state coal royalty payments, all reclamation obligations and up to $20 million in post-petition accounts payables. It also offered to carve-out certain real estate parcels, which will be marketed separately by Cloud Peak Energy.
"We have achieved an outcome that we believe supports the interests of all our stakeholders. NTEC has a highly experienced management team with a strong track record as owner of the Navajo mine," said Cloud Peak President and CEO Colin Marshall in an Aug. 16 statement.
The Cloud Peak Energy mines will continue to operate as normal while the company finalize the competitive marketing process.
The binding bid is subject to the signing of a definitive asset purchase agreement and the subsequent approval by the U.S. Bankruptcy Court for the District of Delaware. The company will seek court approval at the Aug. 19 hearing.
The transaction is expected to close in October, subject to bankruptcy court approval.