Patriot Coal on Aug. 13 asked its bankruptcy court for approval of a modified lease agreement with U.S. Bank and Banc of America covering various equipment at its Rocklick coal prep plant in southern West Virginia.
Patriot Coal has been in Chapter 11 protection since July 2012 at the U.S. Bankruptcy Court for the Eastern District of Missouri. It is working toward a reorganization and emergence intact from bankruptcy protection, with a recent compromise deal with the United Mine Workers of America union a key part of that process.
The equipment subject to the revised lease agreement is utilized in subsidiary Eastern Association Coal LLC’s operations at the Rocklick prep plant, located in Boone County in southern West Virginia. The Rocklick plant is sourced by three company-operated underground mines: Black Oak, Gateway Eagle, and Farley Eagle. Both metallurgical coal and thermal coal can be processed and sold from this location.
The involved equipment includes: raw coal handling and storage facilities; the prep plant itself; clean coal handling and storage facility; refuse handling system; railroad track system; and certain ancillary facilities.
Patriot said in the Aug. 13 filing that it engaged in good-faith arm’s-length negotiations with U.S. Bank and Banc of America in connection with modifying the “Early Buyout Option” in the lease agreement and resolving the issues related to payment of a “Rent Deficiency.” “As a result of their good-faith arm’s length negotiations, Eastern, U.S. Bank and Banc of America have entered into the Agreement,” Patriot said. “In addition to preserving Eastern’s right to purchase the Equipment pursuant to an early buyout arrangement, the Agreement amends the Equipment Lease to modify the terms of the Early Buyout Option (the ‘Modified Early Buyout Option’) and resolve the issues involving the Rent Deficiency….”
The Aug. 13 motion is scheduled for a Sept. 24 hearing.