By Greg Johnson, Gillette News Record
Via- Wyoming News Exchange
GILLETTE — A proposed sale of the Eagle Butte and Belle Ayr coal mines to Contura Energy Corp. “is dead,” according to a Tuesday afternoon U.S. Bankruptcy Court filing in the case of Blackjewel LLC.
In a response to a Blackjewel motion to separate the Pax Surface Mine from Contura’s deal to buy it along with the Wyoming mines, the company’s senior debt holder, Riverstone Credit Partners, claims Blackjewel “recently advised Riverstone that Contura’s proposed acquisition of the Western mines ‘is dead.’”
The document goes on to say the deal-killer was Contura’s plans to shorten the time it will operate the Wyoming mines. Previous reports have said the company’s plan was to open Eagle Butte and Belle Ayr only long enough to mine the exposed coal, which could take an estimated six to 12 months. During Blackjewel’s bankruptcy court sale hearing, it was presented that the lifespan of Contura operating the mines would be six to 12 years.
While Tuesday’s Riverstone court filing doesn’t detail how short of a span Contura planned to operate the Wyoming mines, it says the negotiations with the federal government over unpaid royalties are going nowhere “as a result of Contura’s insistence on shortening the existing mine plans at the Western mines.”
It goes on to say that’s why Blackjewel has petitioned the court to separate the Pax mine from the deal.
“With the sale of the Western mines blocked, the Debtors and Contura have abandoned both the successful and back-up bids for the combined Western and Pax mines and entered into a new purchase and sale agreement for the Pax mine only,” the Revelation filing says.
After an auction process, Contura agreed to pay $33.75 million for the three mines. That included an $8.1 million deposit paid to Blackjewel when it was approved as a stalking horse bidder and $24 million to Riverstone upon closing the sale.
With the sale of the Western mines unlikely, “Contura’s proposed acquisition on a stand-alone basis of the Pax mine effectively breaches its agreement in principle with Riverstone,” according to court documents.
Riverstone also argues that abandoning the proposed sale of the mines as a combined deal nullifies the $24 million settlement with Riverstone, which holds $38 million in senior Blackjewel debt.
A Contura Energy spokesperson said the company hadn’t yet seen Tuesday’s filing from Riverstone and that Contura continues to negotiate with the federal government to resolve the sale of the Wyoming mines.
Riverstone’s reservation of rights filing comes less than 24 hours before a scheduled hearing on separating the Pax mine in West Virginia from the Wyoming mines in the sale deal.