One of the nation’s top coal producers, Alpha Natural Resources, on July 7 announced that, contingent upon the finalization of certain definitive documentation and the entry of an order in the coming days, the U.S Bankruptcy Court for the Eastern District of Virginia approved the Plan of Reorganization for Alpha and certain of its wholly owned subsidiaries.
The plan will become effective upon Alpha’s emergence from Chapter 11 bankruptcy protection, which is expected to occur in late July. The plan basically splits the company in two, with certain operations, mostly in Central Appalachia, staying with a reorganized Alpha, and other operations, including its big Belle Ayr and Eagle Butte strip mines in Wyoming, spun off to certain creditors operating under a new company called Contura Energy.
“Confirmation of Alpha’s Plan represents the final Court milestone in a complex, one-year restructuring process,” said Alpha Chairman and CEO Kevin Crutchfield. “We appreciate the commitment of our workforce, the trust of our customers, and the ultimate support of our creditors and broader stakeholders in helping to pave the way for Alpha’s successful emergence as a more streamlined, financially secure company with attractive prospects for the future. I also want to thank our lender group, who have provided steadfast support for our Plan and worked tirelessly with Alpha and multiple stakeholder constituencies to resolve challenges and reach positive outcomes.”
Upon emergence, Alpha is expected to operate as a privately held company, positioned well to satisfy its environmental obligations on an ongoing basis.
In addition to plan confirmation, and consistent with the previously filed Asset Purchase Agreement, the court also approved Alpha’s sale of certain core coal assets to Contura Energy, which is held by a group of Alpha’s first lien lenders. The sale, which is scheduled to close concurrently with Alpha’s emergence, includes the company’s:
- two Powder River Basin mine complexes in Wyoming (Belle Ayr and Eagle Butte);
- the Nicholas, McClure and Toms Creek mine complexes in West Virginia and Virginia;
- all of the company’s Pennsylvania coal operations and certain reserves;
- the company’s interest in the Dominion Terminal Associates coal export terminal in Newport News, Virginia; and
- certain other assets, including working capital.
In addition to operating as an independent, competitive entity in the U.S. and international coal markets, Contura Energy will provide specified contingent credit support for the reorganized Alpha in the aggregate amount of $35 million, from the effective date of emergence through September 2018, subject to the terms and conditions of the Global Settlement Term Sheet filed with the court. Over the next 10 years, Contura has agreed to also make contributions of up to $100 million into certain restricted cash accounts to help fund the ongoing reclamation activities of reorganized Alpha, in addition to other support to be provided.
Alpha and certain of its wholly-owned subsidiaries filed voluntary petitions to reorganize under Chapter 11 in August 2015. The company filed its preliminary Plan of Reorganization on March 8 and voting on the plan concluded on June 29.
Alpha Natural Resources is one of the largest and most regionally diversified coal suppliers in the United States. With affiliate mining operations in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming, Alpha supplies metallurgical coal to the steel industry and thermal coal to generate power to customers on five continents.
As of the August 2015 bankruptcy petition, Alpha was among the largest domestic producers of coal by volume in the United States. It was the nation’s leading supplier and exporter – and one of the world’s largest suppliers – of metallurgical coal for steel producers and a major supplier of steam coal to electric utilities and manufacturing industries across the country. Measured by volume, steam coal accounted for 78% of the debtors’ 2014 coal sales (approximately 66 million tons), with met coal accounting for nearly the entirety of the remaining 22% of coal sales (approximately 18.6 million tons).