Patriot Coal Corp. has lined up a deal to sell most of its operating mines to Blackhawk Mining LLC, in a debt-fueled transaction that leaves retirees and union contracts behind

Posted on June 8, 2015

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Patriot Coal Corp. has lined up a deal to sell most of its operating mines to Blackhawk Mining LLC, in a debt-fueled transaction that leaves retirees and union contracts behind.

In bankruptcy for the second time in recent years, Patriot has been struggling against declining demand for coal. It is racing to get a deal in place before it runs out of money and is forced to shut down. But it is facing resistance from some creditors to the sale.

Patriot returned to bankruptcy in May, less than 18 months after emerging from chapter 11. The West Virginia mining company said it had a sale in the works that would help it tackle its debt load, which includes $791 million in loans and bond debt.

Blackhawk won’t put up cash for Patriot’s mines. Instead, the transaction will swap out Patriot Coal’s funded debt for new debt securities totaling about $643 million, as well as 30% of the new company to be created out of the bankruptcy buyout.

The new Blackhawk won’t shoulder Patriot’s employee obligations or its contracts with the United Mine Workers of America, said Patriot lawyer Stephen Hessler, speaking at a hearing Wednesday in the U.S. Bankruptcy Court in Richmond, Va.

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Patriot Coal Files Motion Outlining Proposed Sale of Substantially All Operating Assets to Blackhawk Mining, LLC, Under Chapter 11 Plan

SCOTT DEPOT, W.Va., June 3, 2015 /PRNewswire/ — Patriot Coal Corporation ("Patriot" or "the Company") (OTC Pink: PATCA), a producer and marketer of coal in the eastern United States, today announced that it has filed with the Bankruptcy Court a letter of intent for a proposed sale of a substantial majority of its operating assets to Blackhawk Mining, LLC ("Blackhawk"), as well as a motion outlining bidding procedures. The contemplated transaction would be consummated pursuant to a chapter 11 plan and is subject to documentation of a definitive asset purchase agreement, bankruptcy court approval of the sale, confirmation of a chapter 11 plan, and other customary conditions. Patriot’s mining operations and customer shipments will continue in the ordinary course during the sale process.

Under the terms of the letter of intent, Blackhawk would issue to Patriot’s secured lenders new debt securities totaling approximately $643 million plus Class B Units providing them an ownership stake in Blackhawk.  In addition, Blackhawk would assume or replace surety bonds supporting reclamation and related liabilities associated with the purchased assets.

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Patriot Coal to sell most assets to Kentucky-based Blackhawk Mining

 

Patriot Coal Corp. has announced its intent to sell a “substantial majority” of its operating assets to Blackhawk Mining LLC.

The company will acquire Patriot’s Panther, Rocklick, Wells, Kanawha Eagle, Paint Creek and Midland Trail mining complexes, which are all located in southern West Virginia.

Blackhawk, headquartered in Lexington, Kentucky, already owns mining operations in Mingo and Logan counties in West Virginia, in addition to operating mining facilities in Indiana and Eastern Kentucky.

Patriot filed the motion in bankruptcy court June 3, after filing for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia in Richmond, Virginia May 12.

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