Coal Age Magazine - For more than 100 years, Coal Age has been the magazine that readers can trust for guidance and insight on this important industry.
Issue link: https://coal.epubxp.com/i/629433
While it confirmed cash holdings and short-term investments of more than $600 million as of January 11, it expected and did receive $275 million in debtor-in-possession (DIP) financing on January 12. "Upon approval by the Bankruptcy Court and satis- faction of customary conditions, these financings, as well as the company's existing liquidity and cash generated from ongoing operations, will be used to support the business during the restructuring process," the company said. Arch has set up a website for documents and scheduled hearings related to its case at www.archcoal.com/restructuring. Davis Polk & Wardwell is serving as the company's legal advisor, and PJT Partners is serving as financial advisor. Judge Approves Cutting of Walter Energy Labor, Benefits Deal A federal judge in Alabama has given her approval to a proposal by troubled producer Walter Energy to end benefits for retirees and reject its labor agreements with two unions. According to Reuters, U.S. Bankruptcy Judge for Alabama's Northern District Tamara Mitchell gave the greenlight this week. In her filed 57- page opinion, she said that producer's situation would spin from bad to worse if the existing deals had to be maintained. Walter, which filed for Chapter 11 for its U.S. assets earlier this year, had been trying to better position itself to sell off its operations. "The court finds credible that no potential buyers have an interest in assuming such obligations, let alone assuming such obligations and investing such new capital," Judge Mitchell reportedly stated. The collective bargaining agreement termination will allow a sale to proceed. Walter already had an offer on the table for an asset purchase by Coal Acquisition, a group comprised of its senior lenders. An auction on January 5 adjourned with no com- petitive bids received. Should the sale close, Reuters said, Coal Acquisition would assume $115 million to $122 million in liabilities and also pay about $5.4 million for Walter's assets. Additionally, it would for- give about $1.25 billion owed by the producer. If the deal falls through, Mitchell reportedly said in the opin- ion, Walter will have no other choice but to begin shutting down its Alabama mines and sell them off one by one, thus reducing their value. n e w s c o n t i n u e d Anglo to Sell Dartbrook to Australian Pacific Coal Australian Pacific Coal (AQC) will purchase Anglo American's 83.33% interest in the Dartbrook coal mine, located in the Hunter Valley of New South Wales, Australia. Under the terms of the agreement, AQC w ill acquire Anglo American's interest in Dartbrook for up to A$50 mil- lion (approximately $36 million). The deal consists of an upfront cash payment of A$25 million and the grant of a royalty equal to A$3 for each metric ton (mt) of coal produced by the operation in the future and A$0.25 for each mt of coal sourced from other sites and processed using Dartbrook's processing infrastructure. The transaction remains subject to several conditions, including the waiver of pre-emption rights by Anglo American's joint venture partner, Marubeni Coal Pty Ltd. and the receipt of local and federal government consents for the transfer of the mining and exploration rights related to the operation. The transaction is expected to com- plete by mid-2016. Dartbrook consists of an underground thermal coal mine and associated processing infrastructure that has been on care and maintenance since 2006. Glencore to Divest Optimum Mine in South Africa South African producer Glencore is reportedly ready to sell the struggling Optimum mine for $136 million, or 2.15 billion rand, to Tegeta Exploration and Resources just months after seeking pro- tection from its creditors. Business rescue practitioners, who have been overseeing the producer and its activities since August, told Reuters that the move will keep the operation, which produces 10 million metric tons (mt) annually, from idling and will allow about 500 workers to keep their jobs. If the pending sale is approved, the proceeds will be used to pay down some of Optimum's debt, with Glencore paying the remainder. The deal had a January 1 effective date. Business rescue law in South Africa is akin to Chapter 11 bankruptcy outlines in the U.S. The protection Glencore is currently under gives it a temporary delay against those seeking to file claims against the company or its assets. Proceedings in its case, according to Reuters, are due to be completed by the end of February. Glencore Cuts Collinsville Staff, Threatens Closure Glencore's Collinsville mine in Queensland, Australia, the nation's oldest coal operation, will see nearly all staff laid off as it considers a complete mine idle due to market conditions. According to a report in The Australian, the Bowen Basin open-cut mining complex has noti- fied 180 of its 230 workers of the furlough and said production will cease if market conditions do not get better. "In 2016, we will phase down overburden removal and only pro- duce coal from in-pit inventory and field stockpiles. We will reassess the situation during the year," Glencore officials said; the company is 55% owner of the mine. The layoffs are a second round for the mine in about six months; 80 miners were cut from its payroll in May. Itochu Coal Resources and Sumitomo are Glencore's joint venture partners in Collinsville, which has been in operation since 1919. The thermal complex produces about 2.9 million metric tons annually. Continued on p. 6... January 2016 www.coalage.com 5 W O R L D N E W S ¸ ˛ ˝ ¸ T O P 1 0 C O A L - P R O D U C I N G S T A T E S (in Thousand Short Tons) Week Ending (12/26/15) YTD '15 YTD '14 % Change Wyoming 353,802 395,665 -10.5 West Virginia 98,655 112,187 -12.0 entucky 65,764 77,468 -15.1 Pennsylvania 56,493 61,877 -8.7 Illinois 56,405 58,025 -2.8 Montana 41,734 44,562 -6.3 Texas 36,762 43,654 -15.8 Indiana 34,404 39,267 -12.4 North Dakota 26,225 29,157 -10.1 Colorado 21,186 24,008 -11.8 U.S. Total 887,970 1,000,049 -11.0