The bankruptcy court for coal producer Walter Energy on Jan. 8, following a Jan. 6 hearing, issued a written order approving the sale of Walter’s main coal mining assets in Alabama to Coal Acquisition LLC, which is owned by several of Walter’s primary lenders.
On Nov. 25, the U.S. Bankruptcy Court for the Northern District of Alabama approved a bid process that established Coal Acquisition as the “stalking horse bidder” for these assets, which include two United Mine Workers of America-represented longwall mines working the Blue Creek coal seam. No other party offered a competing bid for these assets (called the “Acquired Assets” in court filings), so no auction for them was held.
Said the Jan. 8 court ordert: “The Debtors and their professionals marketed the Acquired Assets and conducted the marketing and sale process in compliance with the Bidding Procedures and the Bidding Procedures Order. Based upon the record of these proceedings, creditors and other parties in interest and prospective purchasers were afforded a reasonable and fair opportunity to bid for the Acquired Assets.
“As no other Qualified Bid for the Acquired Assets was received prior to the bid deadline, no Auction was conducted. Consequently, the Debtors have determined in a valid and sound exercise of their business judgment that the highest or otherwise best Qualified Bid for the Acquired Assets is that of the Stalking Horse Purchaser.”
The creditors that control Coal Acquisition held allowed secured claims, as of the bankruptcy petition date, that included term loans in the aggregate principal amount of $978,178,601 and first lien notes in the aggregate outstanding principal amount of $970,000,000. They were allowed to credit bid this debt in the sale process, giving them a commanding advantage over other potential bidders.
Upon the closing of this buy, Coal Acquistion can’t be deemed to be the successor of or successor employer under any Collective Bargaining Agreements and any Benefit Plans, except for Buyer Benefit Plans, under the Coal Act, and any common law successorship liability in relation to the UMWA 1974 Pension Plan, including with respect to withdrawal liability.
The current members of Coal Acquisition are certain affiliates and managed funds and/or accounts of the following: Apollo Global Management LLC, Ares Management LLC, Caspian Capital LP, Fidelity Investments, Franklin Mutual Advisers LLC, GSO Capital Partners LP and KKR Credit Advisors (US) LLC.
Coal Acquisition did not acquire the coke plant in Alabama owned and operated by Walter Coke, Walter’s coal mining operations in southern West Virginia or the Choctaw mine in Alabama. The Acquired Assets include: Alabama Underground and Gas, including Mine No. 4 and Mine No. 7; JWR Mine No. 5; Barge Loadout located in Tuscaloosa County, Alabama; Highway 59 Mine; East Brookwood Mine; Blue Creek Coal Sales; Black Warrior Methane Corp. Stock/Black Warrior Transmission Corp. Stock; Port of Mobile Lease; Walter Black Warrior Basin LLC; and Tuscaloosa Resources, Inc. (Swanns Crossing/Carter Mine).
Incidentally, the United Mine Workers of America, representing the interests of over 1,280 active and laid-off employees at the Walter mining complexes and 2,700 Walter retirees and their dependents, on Jan. 8 filed a notice with the bankruptcy court saying they are appealing orders severing UMWA obligations to the U.S. District Court for the Northern District of Alabama.