Editor's note: After deadline for Wednesday's Gillette News Record, Cloud Peak Energy filed an afternoon motion that pushes back its auction and sale schedule a week, meaning the auction that had been scheduled for Thursday is now scheduled for Aug. 8.
It also resets a stipulation that the company can select a stalking horse bidder for any or all of its assets up to two days prior to the auction. The stalking horse deadline for Cloud Peak’s Thursday auction came and went Tuesday without a bidder being named.
Cloud Peak has control of its auction and sale process, with authority to set and change deadlines along with approval or denial of bids.
Should a buyer or stalking horse bidder emerge from the process, a sale hearing will be held Aug. 19 in the U.S. Bankruptcy Court for the District of Delaware.
Following is a related story that ran in Wednesday's newspaper.
With most eyes in the Powder River Basin on Blackjewel LLC’s bid deadline and potential sale of the Eagle Butte and Belle Ayr mines to Contura Energy, an important threshold in the Chapter 11 bankruptcy of Cloud Peak Energy has passed quietly.
Cloud Peak, which operates the Spring Creek, Cordero Rojo and Antelope mines in the PRB, didn’t announce a stalking horse bidder for any or all of its assets by Tuesday’s cutoff. Both companies have auctions dates of Thursday.
That Cloud Peak didn’t name a stalking horse bidder isn’t unusual or unexpected, said Robert Godby, director of the Center for Economics and Public Policy at the University of Wyoming. Unlike the Blackjewel bankruptcy, Cloud Peak’s is an unrestricted auction that allows the company to decide whether to accept or deny any of the bids.
“With an unrestricted auction, you can bid for all or parts of it,” he said. “That’s a little different from the Blackjewel one where it’s basically a deal for three specific mines.”
Having a stalking horse in Cloud Peak’s case could hurt the company’s position overall because it would tip off other potential bidders which assets the company has more interest in, Godby said.
“What if someone bids on part of it or the opposite occurs?” he said. “I can see why there might not be a stalking horse here. They have reserved the right to consider and accept and reject all offers, so it’s not like they’re constrained.”
Another difference is Cloud Peak has already identified a $170 million credit bid supported by more than 60% of its creditors. What that means is that those creditors can bid up to $170 million for any of the assets without putting up more money.
“Another possibility is they may just throw in a bid of $170 million for everything if they’re interested in running a restructured company,” Godby said. “The weird thing about the Cloud Peak bankruptcy is that it’s not about a specific mine or set of mines. At the end of the day, there’s going to be a huddle among all the creditors and a conversation about whether they should accept any bids or what are those bids going to be.”
Cloud Peak employs about 1,200 people at its three operational mines in the PRB, including nearly 1,000 at the Antelope and Cordero Rojo mines in Campbell County.
Because Cloud Peak Energy has more flexibility and control over its bid process, it’s possible it could sell everything, some assets or go back to the drawing board and hold another auction, Godby said.
“Because of the open nature of this auction, it will be really interesting to see how they consider bids and what they might accept and reject,” he said.
Along with Thursday’s auction, which will be held if there are multiple qualified bids, a sale hearing has been set for Aug. 7.