Bankrupt Blackjewel says it has Secured a Buyer for Some of its Coal Mines
A buyer for some of bankrupt coal company Blackjewel’s mines has emerged.
In a court filing Thursday, July 25, the West Virginia-based company said Contura Energy Inc., which operates both surface and underground coal mines across Appalachia, had agreed to be a “Stalking Horse Purchaser” or initial bidder for three of the company’s surface mines.
Under the agreement, Tennessee-based Contura would purchase Blackjewel’s two Wyoming mines and its Pax Mine in Fayette County, West Virginia.
Contura Energy was formed following the Alpha Natural Resources bankruptcy, in July 2016. The company later merged with its former owner, Alpha. It previously operated the Eagle Butte and Belle Ayr mines in Wyoming, but sold them to Blackjewel in late 2017. As part of the sale,Contura said it expected to write off more than $400 million in taxes and about $200 million in reclamation liabilities.
In exchange for the three surface mines, Contura has agreed to assume hundreds of millions of dollars in liabilities including remaining payroll obligations for hundreds of employees. The company would also provide $20.6 million in cash to keep operations running, which would include an immediate $12.5 million cash deposit.
Under the deal, Contura also committed to bringing back the majority of employees previously working at the three sites.
The deal is subject to court approval and other bids. Blackjewel is asking the court to approve a swift bidding and auction timeline. The company proposes to close all sales no later than August 5.
Blackjewel’s other Appalchian mines would also be up for sale during the bidding process. In its initial filing, the company listed 24 metallurgical coal mines and processing and prep facilities in Virginia, Kentucky, and West Virginia, as principal assets that employ 1,100 workers. The Appalachian mines have an estimated 600 million reserve tons of coal. The company mined 3.3 millions tons last year. The federal government’sEnergy Information Administration said in 2017 that the companies’ combined output made them the country’s sixth-largest coal producer.
Lawyers representing Blackjewel said the agreement is the company’s “last opportunity” to return employees to work and not liquidate their assets.
“Without Contura’s offer to purchase the Western Purchased Assets and Pax Purchase Assets and fund the Debtors’ expenses during sale process by pre-funding the purchase price, the Debtors would be out of options, would immediately convert to chapter 7, and substantial value and jobs would be lost,” they wrote.
A hearing has been set for 2:30 p.m. EST Thursday to consider the proposal.