Contura Energy offers to buy mines from Blackjewel
Contura Energy has made an offer to buy back two coal mines in Wyoming that have been idled since early July when current owner Blackjewl LLC was unable to find financing to continue operations.
The Casper Star Tribune reported that Contura Energy offered to pay $20.6 million two Wyoming mines -- Eagle Butte and Belle Ayr mines -- along with Pax Surface Mine in West Virginia, according to a motion submitted to a federal court July 25. If approved, the deal could return as many as 700 workers to the three mines for the next six to 12 years, Blackjewel attorneys stated in court documents.
Contura Energy set the minimum price for auction, guaranteeing that if the sale proceeds, there is at least one buyer. But other interested companies also have the opportunity to submit higher bids during the auction.
The deal also hinges on the approval from a federal bankruptcy judge.
“After weeks of negotiations with many of the Debtors’ stakeholders ... the Debtors have now secured the best outcome possible under these circumstances, to the benefit of all stakeholders and employees of the Debtors, with the help and support of Contura,” Blackjewel attorneys stated in court documents.
According to a budget dated July 23 submitted to the court by Blackjewel attorneys, the company projected it would have a $5.5 million deficit by Sunday.
Contura agreed to extend an immediate deposit to the cash-strapped company to fund its remaining expenses as the sale progresses. As a condition of the agreement, Contura will not assume responsibility of Blackjewel’s employee retirement plan, effectively terminating the plan if the judge approves the motion.
Contura still holds the permits for the Eagle Butte and Belle Ayr mines, despite having been acquired by Blackjewel in 2017. Contura is therefore still on the hook for the steep costs of reclamation if the mines are abandoned or closed for good.
Two investment firms — Whitebox Advisors LLC and Highbridge Capital Management — came forward as new junior debtor-in-possession lenders for Blackjewel on July 19, each providing the company with $1.45 million in short-term funding. Both companies hold a stake in Contura.
In a press release, Contura said it plans to immediately provide Blackjewel with an $8.1 million purchase deposit "to be used to facilitate an orderly asset sale process, as well as cover the Debtor’s near-term working capital needs and general corporate expenses."
If no additional companies submit bids for the three mines, Contura will pay an additional $12.5 million in cash for assets, according to the company statement.
“Contura’s divestment of these (Powder River Basin) assets over a year and a half ago was a strategic decision to focus on our met-heavy eastern asset base, and while that remains our strategic focus, our considerations changed when Blackjewel declared bankruptcy,” Andy Eidson, interim co-chief executive officer of Contura, said. “Absent another qualified purchaser for the assets, we have determined that the most prudent path forward is to reacquire these mines to reestablish operations, resume safe and responsible coal production, and bring hundreds of miners back to work.”