TheVirginia Department of Mines, Minerals and Energy filed a limited objection tothe sale of Alpha NaturalResources Inc. assets located in the commonwealth in an effort toensure reclamation obligations are met if and when the sale is complete.
Thecommonwealth stated in an April 13 filing that it did not object to the saleitself, referring to "two substantial mining complexes," but hoped toamend language in court documents to ensure that any reclamation obligationsare addressed by Alpha or the new owner.
Thetwo complexes are part of a larger sale of core assets that Alpha hopes to sellto a stalking horse bidder as outlined in a Feb. 8 filing with the U.S.Bankruptcy Court for the Eastern District of Virginia, Richmond Division.
Whilenot listed in the filing, the limited objection likely refers to the Toms CreekComplex and McClure River Plant, according to someone familiar with the assetsale.
The sale also includes assets in Pennsylvania, West Virginiaand Wyoming, as well as a coal export terminal in Virginia. The sale wassubmitted as a part of the company's bankruptcy plan, which was by the court on March11.
Alphafiled for bankruptcyin August 2015 and has sought options for selling both its core and non-coreassets.
TheVirginia DMME wrote in its April 13 filing that it supported the asset sale andhad ongoing discussions with Alpha regarding the plan, but wanted to ensure thereclamation demandswould be addressed when the sale is complete – an increasingly common challengefrom states as the number of coal producers seek protection and asset sales.
Thedepartment went on to state its right to "to further object to the saletransactions, the transaction documents or any amendments or supplementsthereto and any potential transaction of the debtors to the extent that itrelates to the permits, the bonds or DMME's regulatory functions," theDMME wrote.
Specifically,the DMME cited the 92 permits issued to seven of the company's entities, whichare "covered by various surety bonds held by the DMME."
"First,the transaction documents must be modified to clarify that the debtors'existing surety bonds shall remain in place unless and until sufficientreplacement bonds are obtained by the purchaser(s) and approved by DMME throughits normal regulatory approval process," the department requested, addingthat any transfer of these bonds must be approved by the DMME.
Thedepartment went on to further request that transaction documents must clearlystate that "reclamation and other regulatory obligations will not bereleased despite any sale of the mines" and objected to language it feltwould "allow the parties to waive the requirements that an agreement mustbe reached with the government authorities regarding reclamation obligationsand that the debtors' chapter 11 plan must be confirmed."
Accordingto the company, the bid deadline for the asset sale is May 9. If necessary, anauction will follow on May 16 and a hearing for court approval on May 26.
Althoughan auction would not necessarily be required if Alpha only received a singlebidder, a recent bid from RiceEnergy Inc. for the company's natural gas leases in could spur the needfor one.