Alpha Natural to re-emerge from bankruptcy by June 30

TORONTO (miningweekly.com) – Bankrupt US coal miner Alpha Natural Resources on Tuesday said it hoped to exit bankruptcy proceedings by June 30, after it filed a Chapter 11 plan of reorganisation with the US Bankruptcy Court for the Eastern District of Virginia.

Under the reorganisation plan, the company outlined its intention to sell core assets and detailed a path toward resolving all creditor claims to emerge as a streamlined and sustainable reorganised company able to satisfy its environmental obligations on an ongoing basis.

"Since we began the bankruptcy process last August, we have taken numerous steps to enhance efficiency throughout our business and make tough but necessary decisions regarding the future of our operations. By leveraging core assets for sustainable productivity, while addressing the stewardship obligations of our remaining properties, these filings represent an important step in our effort to effectively restructure the company and emerge from Chapter 11 better positioned to meet new market realities,” stated Alpha chairperson and CEO Kevin Crutchfield.

Alpha voluntarily filed for creditor protection under Chapter 1 of the US Bankruptcy Code in August last year, as slumping coal prices tumbled to historically low prices owing to weaker international and domestic economies, and increasing government regulation that had pushed electric utilities to transition away from coal-fired power plants.

On February 8, Alpha had filed a motion with the Bankruptcy Court requesting it to approve procedures to govern a marketing and sale process for its core assets. These procedures were designed to implement a fair and competitive process that would allow all interested parties to bid for Alpha's assets and enable the company to realise the greatest possible value for the benefit of its stakeholders. 

The company explained that the process included a ‘stalking horse’ credit bid of existing secured debt submitted by the company's first lien lenders. As a stalking horse bid, it was subject to higher or better offers, but provided Alpha with a backstop bid of $500-million (plus the lenders' assumption of certain liabilities) for its core assets. 

Unless a higher offer was received before the bid deadline, Alpha planned to sell its core businesses and related assets to the company's first lien lenders under the terms of the stalking horse bid. This and all asset sales were subject to Bankruptcy Court approval.

The stalking horse bid identified the core assets to be auctioned by Alpha, including the Alpha Coal West mine complexes, in Wyoming; the company's McClure, Nicholas and Toms Creek mine complexes, in West Virginia and Virginia; all of the company's coal operations and reserves located in Pennsylvania, including the Cumberland and Emerald mine complexes; the Freeport, Sewickley, and Foundation coal reserves, and all related assets; the company's interest in a natural gas business in Marcellus Shale owned by Alpha entity Pennsylvania Land Resources Holding Company; the company's interest in Dominion Terminal Associates, a coal export terminal in Newport News, Virginia; and certain other assets, including working capital.

Through the plan of reorganisation, all remaining unsold assets would become part of the reorganised Alpha, structured to focus primarily on fulfilling all of the company's environmental reclamation obligations on an ongoing basis.

“While markets continue to be challenged in the near term, we firmly believe that coal's role as a vital fuel source for electricity generation and steel production is secure for the foreseeable future, both here and around the world,” added Crutchfield.

A hearing to consider approval of the proposed bidding and sale procedures before the Bankruptcy Court was scheduled for Thursday.