Arch Coal Inc.filed their reorganization plan with a federal bankruptcy court on May 5,including updates on employee benefits and reorganization data but with littleinformation on meeting future reclamation obligations.
A $75 million superpriority claim of the state of Wyomingand the Wyoming Department of Environmental Quality for reclamation will beterminated once the restructuring is accepted, according to the plan. Archreached an agreementwith Wyoming and the environmental agency in February to offer the $75 millionsuperpriority claim in bankruptcy proceedings in lieu of the $485.5 millionworth of reclamation bonds, but it is unclear from the plan what kind of dealwill replace this arrangement.
An Arch spokesperson said that the process will take sometime and is ongoing. "As part of the restructuring process, we will beevaluating ways to satisfy the bonding requirements on our reclamationobligations when we emerge," he said.
Both Arch and AlphaNatural Resources Inc. have been involved in with the Powder River BasinResource Council and the Western Organization of Resource Councils over whetherthey still quality for self-bonding due to their economic troubles.
Arch will face an approval hearing on June 9 in the U.S.Bankruptcy Court for the Eastern District of Missouri, but may face some resistancefrom some junior debtors.
The plan organizes the debtors with claims against Arch intodifferent categories, with some receiving higher priority payments andunsecured creditors receiving shares of whatever is left over once the formerare paid.
Many of these junior lenders have objected to these plans,and this may spark court fights over the restructuring, according to a Casper Star Tribune report. AnArch spokesperson said the company could not comment on these aspects of therestructuring.
Arch also announced its intention to issue new common sharesto certain debtors upon reorganization.
The plan stated that Arch's debtors shall assume andcontinue to honor employee pension plans, and may honor "in their solediscretion" other employee benefits, though it made it clear that it hadno obligation to do so. When the company filed for bankruptcy, it stated thatit intended "to continue to pay employee wages and provide healthcare andother benefits without interruption in the ordinary course of business and topay suppliers and vendors in full under normal terms for goods and servicesprovided on or after the Chapter 11 filing date."
In its latest outlookon North American coal on May 6, Moody's said that larger, diversified coalcompanies would sit at an advantage over smaller companies once they'verestructured and balanced their finances.