Mining company makes offer on bankrupt company’s assets
Blackhawk Mining LLC is offering to buy most of bankrupt Patriot Coal Corp.’s assets.
Patriot said Wednesday it’s teaming with Lexington, Kentucky-based Blackhawk on a $643 million bid. The “stalking horse” bid would set the floor for an auction process that lets competitors make better offers.
The deadline to submit competing offers is Aug. 7. A judge would have to approve any final sale.
Patriot, based in Scott Depot, West Virginia, said it outlined the proposal in U.S. Bankruptcy Court for the Eastern District of Virginia.
“We feel strongly that the proposed transaction with Blackhawk is in the best interest of Patriot, and its employees and stakeholders,” Patriot President and Chief Executive Officer Bob Bennett said. “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.”
Patriot has eight active mining complexes in West Virginia and employs about 2,900 people, most of them non-union.
The Blackhawk proposal doesn’t involve Patriot’s Federal No. 2 mine in northern West Virginia. That would involve a separate “stalking horse” transaction from a yet-undetermined bidder. Some other mine properties in southern West Virginia also are excluded, including the Hobet 21 complex. The Hobet and Federal properties are under collective bargaining agreements with the United Mine Workers union.
Blackhawk employs more than 1,600 workers at five mining complexes in Indiana, Kentucky, and West Virginia. The company was formed in 2010. Last August, a bankruptcy judge approved the sale of three James River Coal Co. mining complexes to a subsidiary of Blackhawk Mining.
Coal-mining companies in central Appalachia have struggled in recent years, shedding jobs amid low natural gas prices, dwindling coal seams, competition from other states and weaker market conditions.
Patriot Coal filed for Chapter 11 bankruptcy protection on May 12 for the second time in three years. The bankruptcy filing lists both the company’s estimated assets and liabilities at more than $1 billion.
Patriot was formed as a spinoff from the Appalachian operations of former corporate parent Peabody Energy Corp. in 2007. In December, Patriot announced it was permanently closing two mines in western Kentucky and laid off 130 workers at its Corridor G Mining Complex near Madison, West Virginia.
In 2013, a New York bankruptcy judge approved an $802 million financing package so Patriot could continue operating while it restructured.