GILLETTE — Saying Cloud Peak Energy Corp. conducted “a very robust auction process,” a U.S. Bankruptcy Court judge needed less than 30 minutes Monday morning to approve a sale of the coal giant’s Powder River Basin assets to Navajo Transitional Energy Co.
With many of the pre-sale objections either satisfied or being negotiated, Judge Kevin Gross in Delaware said he was pleased to hear nobody Monday object to the sale outright. Pending the company working out some of those remaining issues with creditors, Gross said he’s “as of now … prepared to approve the terms of the sale.”
Those terms include Navajo Transitional Energy Co., aka NTEC, agreeing to pay the federal, state and local taxes and leases owed by Cloud Peak when the Gillette-based company filed for bankruptcy May 10. For Campbell County, that means it’s likely to recover the $8.3 million in ad valorem tax payment Cloud Peak missed that was due the day it filed for Chapter 11 protection. Although the court has previously ruled Campbell County didn’t have any standing to recover those taxes, that NTEC would be willing to take that debt on shows it’s a solid company that wants to be a good business partner with the community, said Campbell County Commissioner Mark Christensen.
“Right now on this day, I’m just happy there was a bidder wanting to keep these going and pay the tax,” he said after learning NTEC has been approved as the winning bidder. “It looks to me like they want to be a good neighbor and I think that’s all really exciting. … This is really the best possible option we could have had.”
NTEC has agreed to buy the Antelope and Cordero Rojo mines in Campbell County, along with the Spring Creek mine in southern Montana, according to court records. It also will own the Sequatchie Valley reclamation project.
According to court filings, the Farmington, New Mexico-based Native American corporation also will:
Pay a cash deposit of $15.7 million when the sale closes;
Assume a $40 million second lien promissory note;
Pay a 15 cent per ton royalty payable quarterly for five years for coal produced and sold from the Antelope and Spring Creek mines. At Cordero Rojo, the royalty will be paid on any tons produced in excess of 10 million per year. Based on last year’s production of 23.2 million tons of coal produced at Antelope, 12.6 million at Cordero Rojo and about 13.8 million at Spring Creek, that royalty would’ve been about $5.9 million over the year;
Carve out certain parcels of real estate that can sell;
Pay pre- and post-petition tax liabilities and royalties that are projected to be nearly $94 million, and
Assume $20 million of post-petition accounts payable, meaning it will pay the bills that have been accrued during the bankruptcy process.
NTEC also was the only bidder that didn’t need third-party financing to buy the Cloud Peak mines.
When it closes, the sale will elevate NTEC’s footprint as a U.S. coal producer, the company said in a Monday press release.
By Greg Johnson
Gillette News Record Via Wyoming News Exchange