Belle Ayr retrospective

The entrance to the Belle Ayr mine in southern Campbell County is partially blocked as it enters the fourth week of a company-wide lockout that has affected dozens of Blackjewel LLC mines and about 1,700 employees in Wyoming, Kentucky, Virginia and West Virginia.

Hundreds of Blackjewel LLC coal miners locked out of their jobs for more than three weeks may have an idea this week about if or when they could be back at work.

Blackjewel reports it has interest from multiple parties with “interest in acquiring the (company’s) assets with respect to their eastern and western operations,” according to a status report filed Tuesday afternoon with the U.S. Bankruptcy Court for the Southern District of West Virginia.

Company officials “hope to file the necessary motions seeking approval of the expedited sale process and the additional financing later this week,” but hasn’t yet secured financing to reopen, the motion says.

Although Blackjewel initially had maintained its goal was to negotiate a financing package that would allow it to reopen all of its mines and reorganize under Chapter 11, it’s moving more toward selling assets because those efforts haven’t been successful.

Any potential sale could include the company as a whole or pieces of it, whichever promises to give the best value to Blackjewel and its creditors, said Blackjewel attorney Stephen Lerner during a Friday court hearing.

In that same hearing, Lerner said the company has received more interest in Wyoming’s Eagle Butte and Belle Ayr mines, the nation’s fourth and sixth most productive, but not the eastern operations.

That means the western mines could sell and be producing coal again before those in Appalachia. Lerner also said it’s possible the end game is that the mines in Kentucky, Virginia and West Virginia don’t reopen.

Time’s running out

A roller coaster ride for 1,700 Blackjewel workers in four states began the morning of July 1 when the company filed for Chapter 11 bankruptcy reorganization. Hours later, a $20 million financing package that was to carry the company through bankruptcy was pulled, prompting Blackjewel to abruptly close its 32 mining operations and lock out employees, including about 600 at Eagle Butte and Belle Ayr in Campbell County.

In the days that followed, a coup by the company’s debt holders ousted former CEO and president Jeff Hoops Sr., $5.9 million in emergency financing was approved to provide security at the mines and pay the company’s health insurance and workers’ compensation premiums. Along the way, about 1,100 employees in Blackjewel’s eastern operations in Kentucky, Virginia and West Virginia haven’t been paid since June 14 and had their June 28 paychecks bounce.

With only enough money left to pay a skeleton crew to provide security at its mines through Thursday, Blackjewel says it has “made meaningful progress toward reaching agreements” in its efforts to expedite the sale process and provide “financing necessary to complete the proposed sale process.”

Blackjewel has reached out to more than 20 companies to solicit interest in buying its assets and so far has had nibbles from eight, according to Tuesday’s filing. Those include potential stalking horse bidders.

A stalking horse bidder is someone that a distressed company, in this case Blackjewel LLC, designates to bid during a bankruptcy process. What this does is set a floor or minimum threshold for other bidders to meet and helps protect the value of the assets being auctioned off.

In the case that another bidder doesn’t submit an offer better than the stalking horse, one option is for that group to then accept the assets in lieu of money the investors are owed and they spin off into another company.

That is what happened in 2015 when Alpha Natural Resources filed for Chapter 11. Along with mines in the eastern part of the United States, Alpha also owned Eagle Butte and Belle Ayr.

The company’s stalking horse group of investors accepted those mines as payment for debt owed them by the company and they formed Contura Energy, which eventually transferred the mines to Blackjewel in December 2017.

Blackjewel has until July 31 to secure funding or find buyers for its assets to continue its effort to reorganize through a Chapter 11 process. If that can’t happen, it may have to change its filing to Chapter 7, which is a straight shutdown and liquidation.

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