Patriot Coal has announced it intends to sell a majority of its operating assets to Blackhawk Mining. The bankrupt coal miner has filed a letter of intent for the proposed sale with the Bankruptcy Court and a motion outlining biding procedures.
The letter of intent’s terms permit Blackhawk to issue to Patriot’s current lenders, new debt securities, which total approximately US$643 million as well as Class B units, which will give the lenders an ownerships stake in Blackhawk. The company will take on surety bonds that maintain reclamation and related liabilities associated with the purchased assets.
Bob Bennett, President and Chief Executive Officer of Patriot, said: "We feel strongly that the proposed transaction with Blackhawk is in the best interest of Patriot and its employees and stakeholders. Blackhawk shares our dedication to operational and environmental excellence and this transaction creates a viable path forward in this challenging market environment, enabling our mining operations to continue serving customers and preserving jobs in the communities in which they operate. As always, we remain committed to operating safely and serving our customers throughout this sale process."
Negotiations are ongoing in the terms of a formal asset purchase agreement. Assets not included in the proposed transaction will be subject to a different sale process that is proposed in the bidding procedures motion. Patriot's operations will carry on as normal, while the sale process takes place.
The transaction is subject to documentation of definitive asset purchase agreement, confirmation of a chapter 11 plan, bankruptcy court approval of the sale, and other regular conditions.
Edited from press release by Harleigh Hobbs
Read the article online at: https://www.worldcoal.com/coal/03062015/blackhawk-mining-gain-new-assets-2357/