[Just filed. Developing story.] October 2, 2023 – Barretts Minerals Inc. and one affiliated debtor (together “BMI” or the “Debtors*”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case No. 23-90794 (Judge David R. Jones). The Dillon, Montana based Debtors, miners of talc sold worldwide for ceramic applications and in North America for paint and coatings and polymer applications," are represented by John F. Higgins of Porter Hedges LLP. Further Board authorized appointments include: (i) Latham & Watkins LLP as general bankruptcy counsel, (ii) M3 Partners, LP as financial advisors, (iii) Jeffries LLC as investment bankers and (iv) Stretto as claims agent.
*The Debtors are a subsidiary of publicly traded Minerals Technologies Inc. (NYSE:MTX).
On June 23rd, MTX announced that "BMI will exit the talc business. This decision comes at the conclusion of a strategic review of the BMI business, including a thorough evaluation of its fit with the Company’s long-term priorities amidst the backdrop of a talc-related litigation environment. In 2022, BMI’s talc net sales were approximately $57 million and represented 2.7 percent of the Company’s consolidated revenue.
To facilitate this decision, BMI is now exploring structural alternatives, including a potential sale of talc assets, and has engaged Jefferies LLC to manage the divestment process. BMI has active mine sites and claims in Montana and manufacturing facilities in Montana and Texas. BMI sells premium quality talc primarily into automotive plastics, catalytic converters, polymeric films, and paints and coating markets. BMI intends to operate its current business in the ordinary course during this process and does not anticipate any disruption to its customers during this assessment and transition." MTX did not deem it necessary to file an 8-K.
The Debtors’ lead petition notes between 100 and 200 creditors; estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $10.0mn and $50.0mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Western States Equipment Company ($620k trade claim), (ii) Montana Minerals Transportation LLC ($77k trade claim) and (iii) Union Pacific Railroad Company ($38k trade claim).
Small amounts of unsecured trade debt is not, however, is not what has compelled the Debtors to seek bankruptcy protection. In respect of the potential liability/claims that are the driver of these filings, ie tort claims related to talc/asbestos exposure, the Debtors have asked for Court authority to file a list of 26 law firms representing a majority of claimants in the "over 550 pending talc-related personal injury lawsuits" in respect of which BMI is a defendant.
Petition Date Highlights
- Dillon, Montana-Based Talc Mining Company, a Subsidairy of NYSE-Listed Minerals Technologies Inc. (MTX), Files for Chapter 11 with Over $10.0mn of Quantifiable Debt (and Unquantifiable Tort Liability Exposure)
- Debtors Seek Chapter 11 Protection to Resolve Legacy Talc/Asbestos Tort Liability (Over 550 Personal Injury Lawsuits Outstanding, Up from @440 at End of 2022)
- June 23rd Announcement that BMI Would Exit Talc Business Noted Asset Sale Aspirations
- Lines Up $30.0mn of DIP Financing from JMB Capital Partners
Events Leading to the Chapter 11 Filing
MTX's latest 2022 10-K notes as to its subsidary: "The Company is party to a number of lawsuits arising in the normal course of our business. The Company and certain of the Company’s subsidiaries are among numerous defendants in a number of cases seeking damages for alleged exposure to asbestos-containing materials related to talc products sold by the Company’s subsidiary Barretts Minerals Inc. As of December 31, 2022, we had 440 open asbestos cases related to certain talc products previously sold by Barretts Minerals Inc., which is an increase in volume from previous years. These claims typically allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and, in some cases, punitive damages, but most of these claims do not provide adequate information to assess their merits, the likelihood that the Company will be found liable, or the magnitude of such liability, if any. We are unable to state an amount or range of amounts claimed in any of these lawsuits because state court pleading practices do not require the plaintiff to identify the amount of the claimed damage. The Company’s position, as stated publicly, is that the talc products sold by Barretts Minerals Inc. are safe and do not cause cancer."
DIP Financing
The Debtors have commitments for $30.0mn of debtor-in-possession to be provided by JMB Capital Partners Lending, LLC.
Recent Financial Performace (sourced from Minerals Technologies Inc. 10-K)
About the Debtors
According to the Debtors (sourced from MTX 10-K): "The Barretts talc operations consist of two operating mines, the Regal mine and the Treasure mine, and an inactive mining property, the Smith-Dillon mine, all located in the Ruby Range mountains east of Dillon, Montana. Refining and processing plant operations are in Barretts, Beaverhead County, Montana, 8 miles south of Dillon, Montana.
In November 2020, the Company began a major stripping campaign at the Regal mine for development of the Imperial deposit. Stripping was completed by a contractor during 2021 and mining has resumed with in-house Company mining crews. Drilling programs during 2015-2018 at the Treasure mine defined new mine resources in the Treasure Island deposit. Mine exploration activities are ongoing with work at both operating mines and the inactive Smith-Dillon mine.
Ore is mined by conventional open pit mining methods with ore selectively mined and stockpiled on ore pads at the mine sites. A contract trucking company transports ore from the mines to the processing plant year-round. Both mining locations are fully supported by local power utilities with dedicated power lines to the sites.
The Company's lands, including the Regal and Treasure mines, Barretts plant site, and related properties held for exploration and development, consist of approximately 2,556 net acres, which encompasses 129 unpatented lode mining claims, appropriating approximately 2,008 net acres of Public Land, 27 patented lode claims, consisting of approximately 187 acres, 219 acres of mineral rights in split reservation, and approximately 93 acres of additional real property.
At these mines, talc mineralization is hosted in highly deformed Archean aged dolomitic marbles of the Cherry Creek group of metasedimentary rocks. Deposits are segregated into several different grades based on mineral impurities of dolomite, calcite, chlorite, graphite, and various iron oxide minerals."
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The post Barretts Minerals Inc. – Montana Talc Mine Operators, Subsidiaries of NYSE-Listed Minerals Technologies Inc. (“MTX”), Seek Chapter 11 Shelter to Resolve Growing Number of Talc/Asbestos-Related Personal Injury Claims appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.