Blackhawk Mining LLC announced it will restructure through a "pre-packaged" bankruptcy filing that will eliminate much of the company's debt with no disruption to employees, customers or vendors.
The company said in a July 15 news release it reached an agreement with over 90% of its lenders and more than 80% of its equity holders on terms that will eliminate over 60% of the company's total debt and provide over $150 million of incremental liquidity. The process is expected to be completed within 60 days.
"Today's announcement represents a significant step in our ongoing efforts to position Blackhawk for long-term success," said Blackhawk CFO Jesse Parrish in the news release announcing the restructuring. "After carefully evaluating our options, we determined that implementing these agreements through a court-supervised process represents the best way to solidify our financial position while ensuring no disruption to our employees, customers, or vendors."
Blackhawk is a privately owned coal mining and marketing company based in Lexington, Ky. that primarily sells metallurgical coal. The company adds its name to a growing roster of recent coal sector bankruptcy including Cloud Peak Energy Inc., Cambrian Coal Corp. and Blackjewel LLC. The recent rash of coal company bankruptcy filings comes only a few years after some of the largest coal companies in the U.S. joined dozens of their peers in filing for Chapter 11 bankruptcy reorganizations.
Blackhawk and substantially all of its subsidiaries will file voluntary petitions for Chapter 11 bankruptcy reorganization in the U.S. Bankruptcy Court of Delaware. The company's proposed plan will be subject to the approval of the bankruptcy court.
If the plan is approved, the company's $639 million first lien term loan will be discharged and lenders will receive 71% of the company's equity and newly issued $375 million first lien term loan. The company's $318 million second lien term loan will also be discharged and lenders will receive 29% of the company's equity.
Blackhawk will receive $50 million of new money debtor-in-possession financing as part of the exit facility for the company.
After the restructuring, the company projects its pro forma leverage will be less than 2.0X debt-to-EBITDA and in line with its industry peers. Blackhawk has sufficient liquidity to continue normal mining operations and to meet current obligations, the company's news release said.