Source: S&P Global
Westmoreland Coal Co.’s creditors are slated to take over its core assets after the company did not secure another qualified bid for the mines.
The creditors served as a stalking horse bidder during Westmoreland’s Chapter 11 proceedings and will acquire the coal producer’s core assets, including its Canadian business and operations at its San Juan and Rosebud mines, in exchange for debt relief. Westmoreland canceled a core asset auction scheduled for Jan. 22 since there were no other bidders, according to a Jan. 21 filing with the U.S. Bankruptcy Court of the Southern District of Texas, Houston division.
The company received several bids for its Buckingham coal mine in Ohio and intends, pending the court’s approval, to sell the mine to an as-yet-unformed holding company for $1 million and pay between $16 million and $20 million to the same entity to take on the assets of another 15 Ohio and Kentucky mines. Experts said high reclamation costs associated with the operations likely influenced the low price tag on the Buckingham mine and payment to transfer the other operations.
Westmoreland said in the filing that it received bids for other noncore assets, though they were not qualified. Those assets may include the Absaloka and Savage mines in Montana, the Beulah mine in North Dakota, the Haystack mine in Wyoming and the Jewett mine in Texas. The company will continue to evaluate bids, but those assets may be acquired by the creditors as well.
The sale of the noncore assets hinges largely on whether the bankruptcy court allows Westmoreland to shed its collective bargaining agreements with the United Mine Workers of America and $329.4 million in retiree benefits, which the creditors refuse to take on, according to a Jan. 16 filing.
The court will hold a hearing on that proposal at 9 a.m. CT Feb. 4 in Houston.
Written by: Ellie Potter
