Source: Dow Jones News Service, October 6, 2015
Posted on: http://envfpn.advisen.com
Patriot Coal Corp. and state regulators overseeing its West Virginia mines on Tuesday struck a deal that provides $50 million to cover cleanup costs and resolves a sticking point to the coal company’s efforts to move forward with its debt-payment plan.
The West Virginia Department of Environmental Protection had been one of the more-vocal opponents of Patriot’s debt-payment plan, which is tied to the sale of its mines to new owners. The state regulator had feared that even with a successful sale, there wouldn’t be enough funds to cover Patriot’s current and future environmental obligations tied to the mines.
The deal announced on Tuesday would see Patriot post $12.5 million in cash to assure its performance of land-reclamation and water-treatment obligations in West Virginia, provided by the hedge funds currently financing Patriot’s chapter 11 case.
Another $7.5 million would come from one of Patriot’s proposed buyers, Blackhawk Mining LLC. The remaining $30 million would come from the cash generated by Patriot’s Federal mining complex under the ownership of its proposed buyer, an affiliate of the nonprofit Virginia Conservation Legacy Fund.
The roughly $158 million in surety bonds Patriot has already posted as a condition of its mining permits issued by West Virginia would remain in place under the deal, which depends upon the Patriot sales and debt-payment plan securing court approval.
“These were the direct results of the DEP’s aggressive action that we took in bankruptcy court,” said Kevin Barrett, the Bailey & Glasser lawyer representing the agency in the case.
The U.S. Bankruptcy Court in Richmond, Va., is slated to take up the sale and debt payment proposals at a hearing Wednesday. Patriot pushed off Tuesday’s scheduled hearing date, in order to continue negotiations to resolve creditors’ objections to the plan.