The bankruptcy estate for Walter Canada Group, which is an affiliate bankrupt U.S. coal producer Walter Energy, has fielded an asset purchase agreement with a party that is associated with a buyer of U.S. assets.
Last year, Walter Energy Canada Holdings and certain of its subsidiaries and affiliates filed an application before the Supreme Court of British Columbia under the Companies’ Creditors Arrangement Act, which is the Canadian equivalent of bankruptcy. Walter Canada controls several shut surface-mining properties in western Canada.
Walter Canada’s chief restructuring officer, William Aziz, said in Aug. 11 testimony that in light of the bids received for the Walter assets in the United Kingdom, it was determined that the Walter Canada Group should focus on realizing value from the Canadian assets and address the Walter U.K. assets at a later time.
By July 21 of this year, the Walter Canada Group received a number of revised proposals for the Canadian assets. Since that date, the Walter Canada Group has been engaged in further negotiations regarding those proposals in an effort to select a final bid to bring before this Canadian court for approval.
Aziz said the bid submitted by Conuma Coal Resources Ltd. is the best bid received for the assets of the Walter Canada Group. The proposed sale transaction, if consummated, will provide the maximum value for the Walter Canada Group’s stakeholders available in the circumstances. The parties finalized the Asset Purchase Agreement on Aug. 8.
The justice handling the case on Aug. 16 approved the deal, writing: “The sale transaction (the ‘Transaction’) contemplated by the Asset Purchase Agreement dated August 8, 2016 (the ‘Sale Agreement’) between Walter Energy Canada Holdings, Inc., and the other entities listed in Schedule A thereto (collectively, the ‘Seller’), Conuma Coal Resources Limited (the ‘Purchaser’) and the Guarantors party thereto (collectively, the ‘Parties’), a copy of which is attached as Exhibit ‘A’ to the Confidential Affidavit, is hereby approved, and the Sale Agreement is commercially reasonable.”
Aziz said in the Aug. 11 testimony that Conuma is a member of the ERP Compliant Fuels LLC group of companies. The ERP companies have been engaged in a number of transactions in the coal market over the last year, including the acquisition of certain of the Walter U.S. Group’s coal assets in West Virginia and Alabama (called in the U.S. bankruptcy case the “Non-Core Assets”). The Non-Core Assets were purchased by Seminole Coal Resources LLC and certain other members of the ERP group of companies.
Conuma’s obligations under the Asset Purchase Agreement are guaranteed and its obligations under certain ancillary agreements to be executed are to be guaranteed by ERP Compliant Fuels; ERP Compliant Coke LLC; Seneca Coal Resources LLC; and Seminole. Each of these guarantors is part of the ERP group of companies.
The proposed closing date for the transaction is no later than two business days after the conditions precedent to closing are satisfied and also no later than Sept. 15, unless extended by the parties.
One of the contracts to be assigned to the buyer is Walter Canada Group’s interest in Belcourt Saxon. Walter Canada owns a 50% interest in Belcourt Saxon Limited Partnership. Belcourt Saxon owns two multi-deposit coal properties located approximately 40 to 80 miles south of the Wolverine Mine in northeast B.C. The other 50% interest in Belcourt Saxon is owned by Peace River Coal Limited Partnership. The Peace River Coal Limited Partnership is a third party not affiliated with the Walter Group. It is affiliated with Anglo American Exploration (Canada) Ltd. Conuma is willing to acquire the Walter Canada Group’s interest in Belcourt Saxon, which includes the Belcourt Put Right, pursuant to which Conuma will acquire the Walter Canada Group’s interest in Belcourt Saxon if the Walter Canada Group is able to satisfy or obtain the waiver of any such rights prior to the date that is 60 days following the deal closing date.
Contacts for Conuma in the asset purchase deal are:
- Conuma Coal Resources Limited, 15 Appledore Lane, P.O. Box 87, Natural Bridge, Virginia 24578, Attention: Thomas M. Clarke; and
- Conuma Coal Resources Limited, P.O. Box 305, Madison, WV 25130, Attention: Ken McCoy, email@example.com.