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Coal mining operation files Chapter 11, names stalking horse

On Behalf of | Jun 4, 2015 | Firm News

The 12th largest coal producer in 2013 was Patriot Coal Corp., a company that recently filed a Chapter 11 bankruptcy for the second time in three years. This time Patriot intends to sell the majority of its assets, keeping only some mining operations. It has announced that Blackhawk Mining LLC is offering to buy the majority of the assets for a bid of $643 million. The company operates in a neighboring state, and there could be some impact on workers and mining operations here in Pennsylvania from the Chapter 11 filing, but that information is not currently available.

There is an auction and bidding process that is conducted when a bankruptcy filer starts out with an opening bid. The initial bidder is called the “stalking horse.” The process will soon be open to allow competitors to submit better bids. The deadline for those bids is Aug. 7.

The bankruptcy judge will review and decide whether to approve the final purchase agreement that comes out of the auction process. Patriot apparently intends to keep its No. 2 mine in northern West Virginia, along with some other mine properties. Reportedly, these are under collective bargaining agreements with the United Mine Workers union, which makes it difficult to find buyers.

In 2013, a bankruptcy judge approved an $802 million financing package to allow Patriot to keep operating while it restructured. It has been a low point for coal mining in recent years due to the availability of cheap natural gas and generally weaker market conditions. Companies do not want generally to purchase a mining operation that is bogged down in pension commitments to the mine workers union. The same dynamics generally plague mines in Pennsylvania, but it remains to be seen whether there will be any notable Chapter 11 reorganization filings for mining operations here.

Source: ABC News, “Bankrupt Patriot Coal Picks Blackhawk Mining as Lead Bidder”, John Raby, June 3, 2015