The bankruptcy court for Trinity Coal, once a major coal producer in Central Appalachia, is due to hold a Nov. 8 confirmation hearing on a plan that would turn over company assets to a “liquidating trust” that would then sell them.
The company on Sept. 29 filed its third amended disclosure statement and reorganization plan with the U.S. Bankruptcy Court for the Eastern District of Kentucky. At the Nov. 8 confirmation hearing, the court will consider whether the plan satisfies the requirements of the Bankruptcy Code, including whether the plan is in the best interests of the holder of claims and interests, and will review a ballot report concerning votes cast for acceptance or rejection of the plan.
The debtors are a group of sixteen privately held companies, the first of which, Trinity Parent Corp., wholly owns all of the other companies which are its direct and indirect subsidiaries. In 2010, Trinity Parent was purchased by and became a wholly owned subsidiary of India-based Essar Minerals in a $600m transaction. The debtor companies were shoved into Chapter 11 protection earlier this year by creditors.
The debtors operate a coal mining company in Kentucky and West Virginia. In eastern Kentucky, they hold properties in Breathitt, Floyd, Knott, Magoffin and Perry counties, and in southern West Virginia, in Boone, Fayette, Mingo, McDowell and Wyoming counties.
“In recent years, coal has experienced a precipitous decline in demand due to cheaper alternative sources of energy, namely natural gas and nuclear power, and other factors,” said the Sept. 29 version of the disclosure statement. “This has adversely impacted the entire coal industry, including the Debtors’ business and financial condition, which have been in decline since 2011. Consequently, since the 2010 Transaction, the Debtors have closed five out of their six coal mining complexes.” The only producing operation is Deep Water in southern West Virginia.
Three complexes are located in West Virginia and are referred to as the Deep Water Met Coal Mine Complex, North Springs Met Coal Mine Complex and Falcon Steam Coal Mine Complex. The West Virginia Operations produce compliance, low-sulfur steam coal and mid-to high-vol metallurgical coal. The West Virginia operations include company-controlled coal preparation plants and transportation infrastructure including the Deep Water prep plant, the Norfolk Southern-served Page unit train loadout facility 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 facility under long-term capacity agreements.
The other three complexes are located in 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.
During an initial asset sale process earlier this year, the debtors received first round non-binding proposals from 14 potential buyers across all six mining complexes. After receiving the first-round bids, the debtors and their advisors invited certain of the potential buyers to return for a second round bid and submit concrete binding offers and thereby compete to be a “stalking horse” for some or all of the debtors’ assets.
Under the current plan, assets would be turned over to the liquidating trust, which would be managed by current company executives, with any coal operations after that point only those needed to get the assets to the point where they can be sold.