Monday, August 18, 2014


This was filed [pdf] on Saturday afternoon. Not a lot of time (0 business days) between it and the auction held today.

Pursuant to the Strategic Transaction Bidding Procedures, the Debtors, in consultation with the DIP Agent and the UCC, have selected JR Acquisition, LLC, a wholly owned subsidiary of Blackhawk Mining LLC, as a Stalking Horse Bidder for the purchase of the Debtors’ mining complexes commonly referred to as the Hampden Complex (including the assets of Debtor Logan & Kanawha Coal Company, LLC), the Hazard Complex (other than the assets of Debtor Laurel Mountain Resources LLC) and the Triad Complex for an aggregate purchase price of $50,000,000 plus the assumption of certain liabilities,
Only $50 million, and the bidder does not assume the black lung benefits or workers' compensation benefits that are something like $100 million plus. Blackhawk seems to be a CAPP coal vulture investor.

More about the purchase price:
Section 2.06. Purchase Price; Allocation of Purchase Price. (a) On the terms and subject to the conditions set forth in this Agreement, Buyer shall, on its own behalf and as agent for the relevant Designated Buyers, as consideration for the Purchased Assets, in addition to the assumption by Buyer of the Assumed Liabilities, (i) pay to the Sellers $20 million cash (the “Closing Cash Payment”), (ii) deliver to Kentucky River the Second Lien Note and (ii) deliver to the sellers a third lien secured promissory note in an amount equal to $25 million (the “Third Lien Note” and together with the Closing Cash Payment and the Second Lien Note, the “Base Purchase Price”). The Base Purchase Price shall be subject to adjustment at and after Closing in accordance with Section 2.08 (as adjusted, the “Purchase Price”). The Purchase Price shall be paid as provided in Section 2.11.
Not even all cash.


Anonymous said...

Im confused. I just started looking at this today for fun (earnings season is over).

Looks like there is a $110 drawn DIP and $65 of pre-pet 1st lien LCs outstanding. Apparently they are selling all their assets for $50mm(?)

And thats where I got lost. Who were the DIP lenders? New money? I dont think it was the LC banks, based on what I read.

Are there any other assets here to repay the DIP and 1st lien? What am I missing?

Anonymous said...

Here's a balance sheet from the monthly operating report:

DIP status:
"The Company’s initial borrowing under the DIP Facility was made on April 10, 2014 in the amount of $80 million and a subsequent borrowing of $30 million was made on June 13, 2014. In July 2014, the Company repaid $20.0 million of the outstanding principal on the DIP facility."

So, they have/had $85 million in cash and owe $90 million on the DIP.

But yes, the auction was a disaster for the liabilities subject to compromise.

The bonds seem to be a zero. Amazing.

Anonymous said...

Also: "Borrowings under the DIP Facility have been used to (i) fund the operational and working capital needs of the Debtor, (ii) pay the fees, costs and expenses incurred by the Debtors in connection with their Chapter 11 cases and (iii) pay in full certain pre-petition debt and cash collateral letters of credit issued under the Debtors’ pre-petition credit agreement."

The treatment of black lung and workers' comp claims is a little unclear. However, if either of them is priority, then there will be nothing for unsecured creditors because they are both >$50 million.

Now we see why the auction kept getting postponed.