While much of the Powder River Basin’s coal industry was monitoring a U.S. Bankruptcy Court hearing in West Virginia on Wednesday, another bankruptcy court was quietly approving the sale of Cloud Peak Energy’s three active Powder River Basin coal mines to Navajo Transitional Energy.
Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware signed an order Wednesday giving final approval of the sale of the Antelope and Cordero Rojo mines in Campbell County and Spring Creek mine in Montana.
“We are pleased to have this final order approved and look forward to assuming operations in Montana and Wyoming in mid-October,” said NTEC CEO Clark Moseley in a press release announcing the order. “As a company, we have a solid record of returning mines to profitability and doing so as an industry leader in safety and reclamation.”
The sale makes NTEC the nation’s third largest coal producer.
The Native corporation based in Farmington, New Mexico, will take over mines that employ about 1,200 people and pay about $230 million annually in federal and state taxes and royalties.
NTEC was selected as the winning bidder for Cloud Peak’s major assets in an August bankruptcy sale.
Navajo Transitional Energy is buying the mines, along with the Sequatchie Valley reclamation project, for $15.7 million cash to be paid as a deposit upon closing the sale. NTEC also will assume a $40 million second lien promissory note and pay up to $20 million in post-petition debts accrued during the bankruptcy process.
The company also has agreed to pay a 15-cent per ton royalty for five years on coal produced at the Antelope and Spring Creek mines, and the same royalty on coal produced over 10 million tons at the Cordero Rojo mine.
NTEC also has agreed to pay any pre- and post-bankruptcy federal, state and local tax liabilities Cloud Peak has outstanding and assume all reclamation obligations.
That’s good news for Campbell County, which wasn’t paid $8.3 million in production tax that was due just hours after Cloud Peak filed for Chapter 11 bankruptcy protection on May 10.
Cloud Peak's bankruptcy was fed by a continued weak market for Powder River Basin coal and with about $400 million in debt that was coming due in the next few years.
“I am excited they’re doing right by agreeing to pay the taxes and we’ll look forward to hopefully seeing (Navajo Transitional Energy) in Gillette and get familiar with their management,” Campbell County Commissioner Mark Christensen said after NTEC was chosen as the winning bidder in August.
He also said that the company buying all of Cloud Peak’s operational mines is a good sign the corporation plans to continue mining coal in the Powder River Basin.
Based in Farmington, New Mexico, Navajo Transitional Energy Co. owns the Navajo Mine in the Four Corners area and is organized under the Navajo Nation.
This is a developing story and will be updated.