Licking River asks for packaged sale of most of its coal assets

Licking River Resources and related companies are asking the U.S. Bankruptcy Court for the Eastern District of Kentucky for approval of a sale of most of their assets, including mine permits, a loadout and two coal sales agreements with unnamed parties.

The companies filed the sale request with the court on Dec. 23, with that motion up for hearing on Jan. 7. The companies are Licking River Resources Inc., Licking River Mining LLC, S. M. & J. Inc., J.A.D. Coal Company Inc., Fox Knob Coal Co. Inc., U.S. Coal Corporation, Harlan County Mining LLC, Oak Hill Coal Inc., Sandlick Coal Company LLC, and U.S. Coal Marketing LLC. There were forced into bankruptcy in May and June of 2014 by creditors.

“The Debtors believe that a sale procedure for selling the JAD Debtors’ Assets as described herein as a going concern, including the consideration of assumption and assignment, or rejection, of certain executory contracts and unexpired leases (collectively, the “Sale Process”), is in the best interest of the Debtors’ estates,” they told the court. “After extensive analysis, it appears that the JAD Debtors will experience significant operational losses in the upcoming months due to increased mining costs as a result of certain geological issues and a weakening coal market.Accordingly, the Debtors now seek to sell the JAD Debtors as a going concern.

“However, to the extent such efforts are unsuccessful, the Debtors would propose to also seek bids on subsets of the JAD Debtors’ assets. In the exercise of their business judgment, the Debtors believe that a going-concern Sale Process will maximize the value of the JAD Debtors’ operations for the benefit of the respective Estates, creditors, and all other stakeholders.

“The Debtors have engaged in extensive marketing of their assets in anticipation of this Sale Process. The Debtors and their advisors have contacted approximately two dozen parties who would potentially have an interest in all or some of the JAD Debtors and/or all of the Debtors’ assets. The Debtors have executed non-disclosure agreements with approximately one dozen parties. Although none of these discussions have resulted in a formalized offer at this time, the Debtors believe there is sufficient interest in the JAD Debtors’ assets to justify an orderly sale at this time. Delaying this process will only lead to additional administrative expense costs without a likelihood of realizing additional value.

“The Debtors believe that they will generate interest and receive offers to purchases ubstantially all of the JAD Debtors’ assets as a going concern through the Sale Process. The Debtors, with the advice of their professionals, believe that time is of the essence in proceeding with a going concern Sale Process at this time on an expedited basis. As set forth below, in the event that the Debtors are unsuccessful in achieving a going concern sale for the JAD Debtors’ assets, the Debtors would propose that they sell the JAD Debtors’ Assets on a piecemeal basis to maximize the value of those assets for the respective Estates.”

“The Debtors seek a Bidding Procedures Order that sets a deadline to submit all final written proposed Bid(s) for any or all of the JAD Debtors’ Assets by a deadline of January 21, 2015. While this is a short time frame, because of the extensive marketing in the past and the degree to which prospective bidders are currently familiar with the JAD Debtors’ Assets, the Debtors believe that this time frame for final written offers is realistic and warranted. The Debtors will thereafter identify and designate the best and highest bid (the “Initial Bid”), all subject to higher and better offers and further approval by the Court at a Sale Hearing, and will file a notice identifying the assets to be transferred and all material terms of the transaction (the “Initial Bid Notice”) on or before January 26, 2015. The Debtors will thereafter hold an auctionon February 2, 2015 at a location and time to be determined (the “Auction”). On or before February 9, 2015, the Debtors will file a motion to seeking to approve the sale of the JAD Debtors’ assets to the bidder(s) with the highest and best bid(s) (the “Successful Bidder(s)”).”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.