West Virginia regulators have settled a lawsuit brought against Alpha Natural Resources over concerns about the coal producer's reclamation obligations as it emerges from bankruptcy.
Alpha is one of the biggest coal companies in the country. A Virginia court approved its bankruptcy plan in July. Just prior to that, the company struck a deal with the West Virginia Department of Environmental Protection. But in November, Alpha revealed an additional $100 million in unaccounted-for expenses.
Worried that the burden could leave the company unable to pay for reclamation of damaged mine lands, the West Virginia DEP filed a lawsuit against Alpha that sought to hold executives accountable should Alpha fail again after bankruptcy.
Under the settlement announced this week, the DEP has agreed to dismiss the complaint. In exchange, Alpha agreed to post its Boone County headquarters as collateral, appraised at $6.3 million. In addition, the new company emerging from the bankruptcy, Contura Energy Inc., agreed to post an additional $8.5 million in limited guarantees to cover the company's obligations.
In a release the DEP explained, "Contura agreed to post a $4 million letter of credit and issue a secured $4.5 million guaranty of Alpha’s obligations, each through the end of 2018. By that time, Alpha expects its financial condition to return to the level projected in its prior bankruptcy projections."
In a release Alpha CEP David Stetson said, "Alpha is pleased that the concerns raised by the West Virginia Department of Environmental Protection with respect to the proposed settlement between Alpha, Contura Energy, and the agent for Alpha's former first-lien lenders have been fully addressed."
The agreement still needs to be approved in bankruptcy court.