The West Virginia Department of Environmental Protection (DEP) has entered into definitive documentation of its previously announced agreement in principle with the state's largest coal operator, Alpha Natural Resources, which filed for bankruptcy in August 2015.
Alpha filed the agreement with DEP along with similar agreements with the other States in which Alpha will continue to operate, as well as several agencies of the US, with the court overseeing Alpha's bankruptcy case. The bankruptcy court also entered an order approving the agreements and confirming Alpha's bankruptcy plan. A closing is expected to occur later this month.
The DEP's agreement with Alpha has an undiscounted value of more than US$325 million to the State of West Virginia. It will set out the bonding and reclaiming of all of Alpha's legacy liability sites in West Virginia, as well as its continuing operations in West Virginia.
Under the agreement, the surety bonds Alpha previously posted to obtain its mining permits will remain fully in place. But Alpha, West Virginia's last remaining self-bonded coal company, will post an additional US$100 million in surety and other forms of bonds to replace all of the self-bonds at its active and inactive mining sites in West Virginia. Alpha will also immediately post US$39 million in letters of credit or cash bonds as financial assurance for the performance of Alpha's reclamation and water treatment obligations at its other remaining self-bonded sites in West Virginia.
Alpha has committed to post bonds for – and reclaim and treat water at – all of its remaining mining sites, including sites in other States and sites at which it has ceased mining operations, over time.
Consequently, Alpha and its secured creditors have committed to provide at least an additional US$229 million in secured funding. Of that amount, Alpha has committed to provide at least US$124 million of funding for reclamation and water treatment over ten years, with a further commitment to provide half of its excess operating cash flow over and above that amount for reclamation and water treatment at its legacy sites.
The purchaser of Alpha's Wyoming and other operations, an entity formed by Alpha's secured creditors, has agreed to provide the remainder of the funding—an additional US$55 million in reclamation and water treatment funding over the next five years, as well as a guaranty Alpha's excess operating cash flow commitment, up to an additional US$50 million.
West Virginia's share of the $229 million in funds committed to reclamation and water treatment will be more than 80% for at least the first two years.
Kevin W. Barrett, a Bailey & Glasser partner and Special Assistant Attorney General for the State in connection with the Alpha and other coal company bankruptcy cases, called the agreement "ground-breaking." He added, "Not only does the agreement secure the commitment of Alpha and its secured creditors to fully bond and reclaim all of Alpha's mining sites in West Virginia, it marks the first time that a large coal company has committed to remain in business and continue to operate for the primary purpose of reclaiming its legacy mining sites.
Read the article online at: https://www.worldcoal.com/mining/13072016/alpha-natural-resources-committed-to-west-virginia-mine-reclamation-2017/
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