Alpha Natural Resources, which when it filed for Chapter 11 protection in August said it planned to reorganize and emerge from bankruptcy as a viable entity, on Oct. 22 asked the court to approve a bid procedure by which it would sell shut or otherwise non-essential mining operations.
The Chapter 11 cases of Alpha and various subsidiaries (known as the “Debtors”) have been consolidated and are pending at the U. S Bankruptcy Court for the Eastern District of Virginia. The Oct. 22 sale motion is due for a Nov. 5 hearing at the court.
“With the assistance of their advisors, the Debtors are in the process of developing and implementing a comprehensive long term business plan to address the unprecedented market challenges affecting the Debtors (the ‘Business Plan’),” the company said. “Consistent with the terms of the Debtors’ postpetition financing facility, the Debtors currently anticipate finalizing an initial draft of their Business Plan by the end of October 2015.
“In connection with the preparation of the Business Plan, the Debtors are developing a list of certain mining properties and related assets that they will seek to dispose of in connection with their reorganization. To date, the Debtors have identified the Assets on the Asset Schedule attached to this Motion for potential disposition, which are comprised of Assets relating to closed and idled mines (collectively, ‘Inactive Mines’) that (a) are not generating revenue for the Debtors’ businesses but (b) impose reclamation, maintenance and other costs on the Debtors’ estates. Although the Asset Schedule currently includes only Assets relating to Inactive Mines, as further described below, the Debtors may amend the Asset Schedule as part of the proposed Bidding Procedures to include additional Assets, such as any other non-core assets identified in the Business Plan.
“The Debtors also may remove any Assets from the Asset Schedule if they determine that a sale of such Assets ultimately will not be pursued under the Bidding Procedures.. A significant number of the Assets relating to the Inactive Mines previously have been marketed for sale, and the Debtors believe that the Bidding Procedures will maximize their ability to bring any sales of such Assets to a prompt conclusion. Such sales will help the Debtors monetize the Assets and free the Debtors from incurring additional expenses relating to these properties. Similarly, the Bidding Procedures are expected to help maximize the value of the non-core assets that may be added to the Asset Schedule.
“The Debtors propose to sell the Assets free and clear of liens, claims and encumbrances and to assume and assign to buyers certain Executory Contracts in connection therewith. The Debtors are prepared to conduct a robust public sale process to provide an opportunity for parties to purchase all or any portion of the Assets. Where appropriate (e.g., where there are multiple bids for an Asset), this process may include one or more Auctions. With the assistance of their investment banker, Rothschild Inc. (‘Rothschild’), the Debtors anticipate completing a comprehensive marketing process in an effort to sell the Assets on the best terms possible. The Debtors will market the Assets to financial and strategic buyers, some of whom already have been contacted. The proposed Bidding Procedures are designed to provide the Debtors with the flexibility necessary to allow the Debtors to maximize the value of the Assets.”
The proposed sale order would establish January 20, 2016 at 5:00 p.m. (prevailing Eastern Time) as the deadline for the submission of bids. An initial auction, if necessary, would be conducted on January 27, 2016. The court would hold a sale hearing in early February to look at the results of this bidding.
The Debtors, in consultation with Rothschild and certain parties, are developing a list of parties that the Debtors believe may be interested in, and that the Debtors reasonably believe would have the financial resources to consummate, a sale transaction for some or all of the assets. Preliminary indications of interest are due by Dec. 11.
The listed properties up for potential sale include:
- Black Bear/Ben’s Creek, West Virginia, Mingo County, includes closed Mountaineer Mine;
- Coalgood, Kentucky, Harlan County, closed Coalgood Surface Mine;
- Cucumber, West Virginia, McDowell County, includes loadout and closed Cucumber Mine;
- Goals/Edwight, West Virginia, Raleigh County, Edwight mine that is in the process of being closed; and
- Green Valley, West Virginia, Nicholas County, closed Grassy Creek and Hominy Creek mines.