Trinity Coal, once a major Central Appalachia producer, filed a bankruptcy reorganization plan on Aug. 15 that would, if approved, see its assets turned over to a “Liquidating Trust” that would then sell those assets on the open market.
The Liquidating Trust, run by Trinity Coal’s current managers, will be formed to oversee the wind down, dissolution, and liquidation of the trust assets. The trust will have will no objective to continue or engage in the conduct of a trade or business, except to the extent necessary to, and consistent with, the liquidating purpose of the Liquidating Trust.
Trinity Coal and its affiliates sought Chapter 11 protection earlier this year at the U.S. Bankruptcy Court for the Eastern District of Kentucky. Unlike much larger Patriot Coal, which sought Chapter 11 in July 2012 in a different court, there was never much prospect in the Trinity Coal case of the currently-constituted company being reorganized and emerging largely intact from Chapter 11. Patriot Coal, on the other hand, is looking like a sure bet to emerge intact, but with much revised finances and labor agreements.
The Trinity Coal debtors are a group of sixteen privately held companies, the first of which, Trinity Parent Corp. (TPC), wholly owns all of the other companies which are its direct and indirect subsidiaries. In 2010, TPC was purchased by and became a wholly owned subsidiary of India’s Essar Minerals Inc. (EMI) in a $600m transaction.
The debtors’ operations are organized into six distinct coal mining complexes.
- Three complexes are located in southern West Virginia; Deep Water Met Coal Mine Complex, North Springs Met Coal Mine Complex and Falcon Steam Coal Mine Complex. These oerations produce compliance, low-sulfur steam coal and mid-to high-vol metallurgical coal. The debtors are currently operating and mining coal only on Deep Water and related operations in West Virginia. The West Virginia operations include the Deep Water prep plant, the Norfolk Southern-served Page unit train loadout and the Hughes Creek river terminal on the Kanawha River. The debtors also operate the third-party-controlled, Norfolk Southern-served Ben Creek prep plant and unit train loadout under long-term capacity agreements.
- The other three complexes are located in eastern Kentucky and are referred to as Prater Branch Steam Coal Mine Complex, Little Elk Mining Steam Coal Mine Complex and Levisa Fork & Bear Fork Reclamation Projects. The Kentucky Operations produced compliance and low-sulfur steam coal.
By complex they are:
Deep Water – located in Fayette County, W.Va. The debtors are currently mining coal only at Deep Water, which as of March 1, 2013, has estimated total coal reserves of about 70 million saleable tons and produces high volatile “A” met coal. Approximately 40,000 tons of met coal is mined per month. Deep Water consists of one active surface mine with multiple units, two active highwall miners, and two idle underground mines.
North Springs – is a 16,483-acre site with a well-established infrastructure located in McDowell, Mingo, and Wyoming counties, W.Va. When it was operating, North Springs produced compliance steam coal and high volatile “B” met coal. North Springs controls an estimated 16.1 million tons of coal reserves, most of which is met coal.
Falcon – is located in Boone County, W.Va., and controls an estimated 6.2 million tons of coal reserves. This complex produced low-sulfur steam coal.
Prater Branch – is located in Magoffin and Floyd counties, Ky., and controls an estimated 18.3 million tons of coal reserves. This complex produced lower-sulfur steam coal.
Little Elk – is located in Perry County, Ky., and controls an estimated 11.9 million tons of coal reserves. This complex produced mid-sulfur steam coal.
Levisa Fork – is located in Floyd County, Ky. Coal reserves at Levisa Fork have been depleted and the debtors have been conducting only reclamation activities at the site.
On Aug. 19, on the eve of an Aug. 20 hearing on the reorganization plan, Trinity Coal told the court that due to objections to the plan from Denham Commodity Partners Fund III LP and Travis Coal Restructured Holdings LLC, it needs the hearing to be pushed back to Sept. 19.
In their Aug. 19 objections, Denham and Travis, which have financial agreements with Trinity, said this reorganization plan is unconfirmable and violates the statutory and procedural requirements for solicitation of a plan.
Among the other recent developments in this case is an Aug. 9 approval by the court of the hiring of Ritchie Bros. as auctioneer for various mining equipment. Just what will be sold at auction will largely depend on what equipment any mine buyers might want to keep.