Coal Age

JUL 2015

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Patriot wants to consummate an asset sale by September, a lthough the UMWA and unsecured creditors committee have a sserted there is no need for such a timetable. The unsecured creditors committee and UMWA's 1974 Pension Plan experts contended that Blackhawk, or any other buyer, could afford to wait because "much of Patriot's coal is sold overseas under contracts negotiated three months later, Patriot's metallurgical coal is high quality, or Patriot can sell its coal as a debtor in possession." But the secured lenders said all of those opinions were "beside the point." P atriot, they said, is on track to run out of cash in November. As a result, "every coal buyer knows that it cannot rely on Patriot to deliver coal after November, and every potential bidder for Patriot's assets has known for at least one month it must act now to buy Patriot as a going concern. The earlier a solvent buyer can acquire Patriot's coal, the greater the sale price for that coal, the greater the value to the buyer, and the more the buyer will pay." The secured lenders have provided debtor-in-possession financ- ing to Patriot while it navigates the time-consuming Chapter 11 process. They support Blackhawk's proposal. "It is Blackhawk's judgment that it needs to acquire the debtor's metallurgical coal assets in order to sell them under long-term con- tracts," they said. "As a buyer of the business, Blackhawk wants to make its own decisions on metallurgical coal sales and not be sad- dled with decisions made by predecessor management." Indeed, Blackhawk's position is one like any prospective buyer would take, they added. The secured lenders implored the court "not to jeopardize the debtors' best chance of reorganization by dri- ving Blackhawk away." Blackhawk is not going anywhere, according to Jesse Parrish, the company's director of strategic planning and corporate communi- cations, and the company is confident its offer eventually will be accepted. Bowie Resource Partners Files IPO After initially filing confidentially in February, master limited part- nership Bowie Resource Partners (BRP) has reportedly filed final documentation with the U.S. Securities and Exchange Commission (SEC) on June 19 for a $100 million initial public offering (IPO). No pricing terms have been disclosed. According to an announcement first made public online by investment site Renaissance Capital, the Louisville, Kentucky-based miner will list on the New York Stock Exchange under the ticker symbol BRLP. BRP was founded last year and is owned by Cedars Energy LLC and Galena Asset Management. For the 12 months end- ed March 31, the company's sales bookings totaled $411 million. Citi, Morgan Stanley, Deutsche Bank, UBS Investment Bank, Credit Suisse and Stifel will reportedly serve as joint bookrunners on the IPO. BRP's portfolio includes the Bowie No. 2 mine in Colorado along with Utah mines Dugout Canyon, Skyline and Sufco; Bowie, Skyline and Sufco are all running single longwall panels. Combined, the four mines produce an annual total of 13 million tons of high-BTU, low-sulfur bituminous coal. In related news, BRP recently closed a new 15-year coal supply contract with PacifiCorp to feed its Huntington Power Plant in Utah through the end of the next decade. The new supply deal extends through 2029, though no annual tonnage totals were released. n e w s c o n t i n u e d mt of coal in 2014-2015 with plans to ramp it up to levels of around 250 million mtpy by 2020, in line with CIL's target to hit a produc- tion target of 1 billion mtpy by that year, the official said. MCL's coal washery projects were significant inasmuch as the tardy implementation of increasing coal beneficiation over the y ears. At present, CIL operated 17 washeries with total combined capacity of a mere 39.4 million mt. Of these, 13 were coking coal washeries with combined capacity of 24.9 million mtpy while four were non-coking coal washeries with capacity of 14.5 million mtpy. Last year, a committee of Indian parliamentarians had flayed the government-owned miner CIL for failing to increase beneficia- tion capacity, particularly in view of the fact that laws had been changed, making it compulsory for thermal power companies to use coal with ash content less than 34% for all power plants located 1,000 km away from pitheads. Poland Restructures Coal Group The Polish government expects to launch its revamped coal group Nowa Kompania Weglowa, bringing together 11 viable mines, in late July or early August, Deputy Treasury Minister Wojciech Kowalczyk told the Warsaw Voice. "The debt and capital structure will be deter- mined in such a way as to ensure the firm is profitable," Kowalczyk said. Beyond 2018, Poland will remain one of the few coal producers in Europe and a potential exporter to European Union markets. Norway's Sovereign Wealth Fund Votes to Offload Coal Assets Norway's parliament voted to sell the coal assets of its state pen- sion fund, the world's largest sovereign wealth fund, in what is seen as a major victory for environmentalists. The parliament voted unanimously that the fund, worth almost $890 billion, must divest its holdings in mining and power companies that generate more than 30% of their revenues from coal. The decision is expected to affect between 50 and 75 international companies. Vattenfall Divests Danish Power Plant In a transaction valued at $119 million, Vattenfall is divesting its Nordjylland coal-fired power plant in Denmark. The district heating company Aalborg Forsyning will take over the Nordjylland power sta- tion at the end of the year. "With the divestment in Denmark, Vattenfall has completed an important step in its transition from fossil fuels into renewable energies," said Ingrid Bonde, Vattenfall CFO and deputy CEO. Nordjylland Unit 3 has an installed capacity of 410 MW of electricity and 490MJ/s of district heating. DTEK Reports From Warn-torn Ukraine The largest energy company in Ukraine, DTEK, recently announced its first quarter performance results. The company produced 6.8 million metric tons (mt) of coal (-34.6% YoY), generated 11 billion kWh of electricity (-14.4%), transmitted 12.2 billion kWh of electric- ity via networks (-17.6%), and produced 258 million m 3 of natural gas (+55.5%). "We see that the situation in the sector remains difficult," said DTEK CEO Maxim Timchenko. "Delivery of anthracite from the anti- terrorist operation zone remains constrained, debts due to whole thermal power generation are already more than [$425 million], Continued from p. 5... 6 www.coalage.com July 2015 Continued on p. 8...

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