March 28, 2019 – Further to the Court’s bidding procedures order [Docket No. 141], an auction held on March 25, 2019, and a post-auction process that continued to attract further bids, the Debtors notified the Court [Docket No. 1120] that it had designated successful bidders in respect of what ended up being two groupings of assets: (i) the Maple Eagle, Seminole, and the Oak Grove mining complexes which will be acquired by a newly formed entity that is 79% held by stalking horse bidder Murray Energy Corporation and 21% held by Javelin Global Commodities (UK) Ltd and (ii) the Pinnacle mining complex which will be purchased in part by Bluestone Resources, Inc. and in part by Contura Energy, Inc.
The Debtors’ notice states, “Pursuant to the Bidding Procedures, on or prior to the Bid Deadline, the Debtors received several bids for the Maple mining assets and the Pinnacle mining assets. As of the Bid Deadline, the Debtors did not receive any bids for the Oak Grove mining assets or any bids for the Debtors’ combined assets that the Debtors deemed higher and better than the Opening Bidder’s Proposed Agreement.
On February 27, 2019, the Debtors held an Auction where competitive bidding ensued to determine the highest and best bid for the Maple and Pinnacle mining assets on a stand-alone basis. The Debtors declared conditional highest and best bids on the Maple and Pinnacle mining assets on a stand-alone basis, but did not select a Successful Bidder for such assets, pending determination of any viable bids for the Oak Grove mining assets, or competing combined bids. At both the beginning and conclusion of the Auction on the Maple and Pinnacle mining assets, the Debtors announced on the record that the Debtors would not select a Successful Bidder pending consideration of potential bids on the Oak Grove mining assets and/or combined bids for substantially all of the assets, including the Opening Bidder’s Proposed Agreement.
Since the Auction the Debtors continued to solicit bids for the Oak Grove mining assets and combined bids for both the Oak Grove and Maple mining assets. The Debtors received additional competitive bids, and after engaging in extensive, good faith discussions and consulting with the Consultation Parties, now select the following Successful Bids and Successful Bidders:
The Maple Eagle, Seminole, and the Oak Grove mining complexes will be acquired by a newly formed entity that is 79% held by Murray Energy Corporation and 21% held by Javelin Global Commodities (UK) Ltd. (collectively, the “Successful Oak Grove and Maple Eagle Bid’).
The Pinnacle mining complex will be purchased in part by Bluestone Resources, Inc. (“Bluestone”) and in part by Contura Energy, Inc. (‘Contura’). Bluestone will be purchasing all assets of Pinnacle, other than those purchased by Contura, including the surface reserves and the Green Ridge reserves. Contura will acquire the Pinnacle rights associated with the Indian Creek and Pocahontas #3 reserves and certain surface property and other specified assets at Pinnacle for purposes of water collection and discharge (collectively, the ‘Successful Pinnacle Bid’).
Summary of Successful Oak Grove and Maple Eagle Bid:
The acquirer (“Buyer”), an entity that is 79% held by Murray Energy Corporation (“Murray”) and 21% held by Javelin Global Commodities (UK) Ltd. (“Javelin”), will acquire substantially all of the assets at the Oak Grove, Seminole, and Maple mining complexes for a total consideration of $264.7 million and the assumption of approximately $70 million in reclamation liabilities. Of the $264.7 million in total consideration, $160 million will be paid in the form of take-back paper issued by Buyer to the current DIP Lenders and $42.8 million will be paid in cash. Buyer will also fund $31.7 million in estimated cure costs, tax liabilities, post-petition payables and other administrative liabilities upon closing. In addition, Javelin will cause $10 million in cash to be put on Buyer’s balance sheet to support the purchased assets following the closing, and Javelin and the Debtors will enter in a series of coal sale and/or marketing agreements upon selection as Successful Bidder.
Funding of the cash necessary for the transaction will be provided as follows: (a) Murray will provide a $25 million equity contribution, (b) Javelin will provide a $25 million prepayment facility to BidCo, and (c) Javelin will provide a $40 million working capital facility to Bidco.
Murray and Javelin have committed to closing on or about April 12.
In a press release announcing its selection as a successful bidder Murray stated, "Murray Energy has formed a new, majority owned unrestricted subsidiary company, Murray Metallurgical Holdings, LLC, to acquire and operate the Mission Assets, with its existing JV partner, Javelin Global Commodities (UK) LTD. ('Javelin'), as the minority owner of the newly formed unrestricted subsidiary. Murray Energy’s acquisition of the Mission Assets provides a significant entrance into the metallurgical coal market, allowing for diversification of its portfolio of quality mining assets. The Mission Assets will benefit from Murray Energy’s best-in-class longwall mining and operational expertise, that will further enhance the value of these high quality metallurgical coal properties. Additionally, this acquisition leverages Javelin’s existing global marketing platform, bringing further value to these newly acquired assets. Murray Energy looks forward to utilizing our management and marketing expertise in order to ensure the maximum success of these operations."
Key Terms:
- Scope of Acquired Assets: All of the assets related to and required to operate the Maple, Seminole and Oak Grove mining complexes, including, without limitation all cash collateral associated with any assumed liabilities.
- Purchase Price: Buyer will pay total consideration of $264.7 million and assume approximately $70 million of reclamation liabilities. Of the total consideration, the DIP Lenders will receive $160 million in the form of take-back paper issued by Buyer, and $42.8 million will be paid in cash by Buyer. Buyer will also fund $31.7 million in certain liabilities of the Debtors.
- Other Considerations: Javelin will provide a $40 million working capital facility to Buyer that will be available upon closing to provide sufficient liquidity to support operations post-emergence and cover contract cure costs, fund working capital build, and any other expenses incurred at Closing; Bid assumes that Robindale receivables (which Buyer values at $20 million) will remain with the Debtors' estate and all other receivables will be sold to Buyer. DIP Lenders would be responsible for (a) estate wind-down costs (which shall be no greater than the amount set forth opposite such line item (i.e. $1.0 million) in the budget included in the offer made by the DIP Lenders in their form of asset purchase agreement dated December 28, 2018), provided, that Buyer will fund $1 million of such estate wind-down costs, and (b) any breakage costs associated with the Robindale marketing agreement, which Buyer will not acquire and will not be an assumed contract. Prior to closing, Buyer to be listed as contract miner on all permits to be transferred after Closing (including, but not limited to, MSHA, Alabama and West Virginia permits listed on the schedules). Javelin and the Debtors will enter into a series of coal sale and/or marketing agreements upon selection as Successful Bidder.
Summary of Successful Pinnacle Bid:
Bluestone Successful Bid: Bluestone would acquire all assets related to the Pinnacle mine, other than the specific assets to be acquired by Contura, for an aggregate purchase price of $100,000 (the “Bluestone Transaction”). The Bluestone assets generally relate to all surface property associated with the Pinnacle mine, including the Pinnacle Preparation Plant, all surface reserves (excluding any reserves to be leased to Contura pursuant to the Contura Transaction or reserves located on surface associated with the Mine Void Area (as described on the map on Exhibit A)) and the Green Ridge reserves. Bluestone would not acquire any contracts related to the Pinnacle mine, other than the Lasher Lease, Berwind Lease, NRP Lease (as described below) and West Virginia DOH Lease (collectively, the “Bluestone Assumed Contracts”). The Debtors would transfer to Bluestone each of the permits set forth below under the heading “Bluestone Summary” opposite the heading “Permits” (such permits, the “Bluestone Permits”). In addition, Bluestone would assume certain liabilities associated with the Bluestone acquired assets, including reclamation obligations, cure costs related to the assumed contracts, trade payables, obligations for real estate taxes and accrued payroll and payroll taxes related to the period prior to closing.
Contura Successful Bid: Contura would acquire the sub-surface property rights related to the Pinnacle mine, as well as certain surface properties necessary to manage water discharge obligations and certain additional assets as set forth below and attached, for an aggregate purchase price of $3,750,000 (the “Contura Transaction”). Amounts, if any, with respect to apportioned taxes and all amounts required to be paid to the WV DEP under the proposed consent order number M-19-252 dated January 14, 2019 (the “Consent Order”) will be a deduction to, and paid from, the purchase price at closing (or, in the case of amounts under the Consent Order, will remain as a liability of the estate of the Debtors and Contura will have no liability in respect thereof, and Contura will receive an acknowledgment to that effect from the WV DEP reasonably satisfactory to Contura). In addition, at closing Contura would assume certain liabilities associated with the Contura acquired assets, including reclamation obligations and certain environmental liabilities.
The notice attached the following Exhibits:
- Exhibit 1: Successful Oak Grove and Maple Eagle Bid Summary
- Exhhibit 2: Successful Pinnacle Bid Summary
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