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Alpha Natural Resources’ restructuring plan is approved
July 8, 2016

The bankruptcy-exit plan proposed by Alpha Natural Resources was approved by Judge Kevin Huennekens of the U.S. Bankruptcy Court in Richmond, VA.

The approval confirms Alpha’s chapter 11 plan of reorganization, the product of settlements with the coal miner’s creditors as well as environmental and mining regulators on the federal and state levels.

The Wall Street Journal reported that the judge’s approval allows Alpha, subject to its ability to complete various settlements over the next few days, to move forward with a plan to transfer ownership of its core coal mines to top lenders in exchange for debt forgiveness. The plan further calls for Alpha, which will keep remaining mines, to exit bankruptcy under the ownership of its unsecured creditors, according to Alpha lawyer Carl Black.

Court and regulatory filings show Alpha risks defaulting on its multimillion-dollar bankruptcy financing package if Judge Huennekens doesn’t make his approval of the plan official by Tuesday. It is also required to emerge from chapter 11 protection by July 31.

Included in the plan are settlements to resolve a creditor fight over the company’s assets as well as preliminary deals with federal and state regulators providing assurance that the land at Alpha’s mines will be reclaimed and the water treated.

Court papers show that nearly $293 million in reclamation obligations would be associated with the mines that Alpha keeps, while another $181.1 million in reclamation obligations would follow the mines that the lenders take. The lenders’ company, called Contura Energy Inc., will also face annual water-treatment obligations of $1.8 million, while that figure rises to $13.6 million for the reorganized Alpha.

With roughly $10 billion in debt, Alpha sought chapter 11 protection last August in the midst of a historic downturn in the coal markets. Like other miners that have sought court protection before and after, Alpha sought a traditional reorganization that would see it retain the same corporate structure while slashing its debts.

However, the continued worsening of the coal markets thwarted those plans, and earlier this year, the company decided instead to put itself up for sale. It sold its natural-gas assets to an affiliate of Vantage Energy for $339.5 million earlier this year, and said it didn’t receive any offers for its most valuable coal mines to top senior lenders’ offer of debt forgiveness.

 

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