The bankruptcy court for coal producer Alpha Natural Resources on Sept. 17 approved a flurry of first-day motions from the company, including a motion to obtain debtor-in-possession financing, which is critical for the company to keep its mines in operation while it tries to reorganize under Chapter 11.
Alpha, which is based in Virginia, on Aug. 3 sought Chapter 11 protection at the U.S. Bankruptcy Court for the Eastern District of Virginia, citing factors like poor coal markets and high debt.
The Sept. 17 post-petition financing order, among other things:
- authorizes Alpha to obtain post-petition financing (called the “DIP Financing”) that includes a term loan in the amount of $300 million (the “DIP Term Facility”), a portion of which has been used to fund a cash collateralized letter of credit facility; and
- authorizes a facility for letters of credit (the “Second Out Letters of Credit”) issued to replace letters of credit (the “Existing R/C Letters of Credit”) issued in the aggregate amount of approximately $192 million as of the petition date under the pre-petition credit agreement.
Alpha had announced Sept. 16 that, based on a hearing held the prior day, it anticipated this final order on the DIP financing package. “Finalizing this package with the support of both our secured lenders and the unsecured Creditors Committee represents a significant milestone in our restructuring,” said Alpha Chief Financial and Strategy Officer Phillip Cavatoni. “We believe that, in concert with existing liquidity, this package provides the financial flexibility needed to navigate the Chapter 11 process.”
The court on Sept. 17 also approved other first-day motions, including those related to retention of legal counsel, and also:
- Alpha was authorized to retain McKinsey Recovery & Transformation Services U.S. LLC as Turnaround Advisor;
- Alpha was approved to retain Alvarez & Marsal North America LLC as Financial Advisor; and
- Alpha was authorized to retain Rothschild Inc. as Financial Advisor and Investment Banker.
Alpha is one of the biggest coal producers in the U.S., with mines in states like Wyoming, Kentucky, Pennsylvania and West Virginia. During 2014, Alpha’s coal shipments totaled 84.5 million tons, compared with 86.9 million tons in 2013.