Judge Approves Motion For Contura To Purchase Blackjewel's WY Mines

Aug 6, 2019

Screenshot from Interior's Response to a Contura Sale
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U.S. District Judge in West Virginia Frank Volk has approved the motion for Contura Energy to purchase Blackjewel LLC's two Wyoming mines: Eagle Butte and Belle Ayr. Though, there are still hoops to jump through. The court will need to settle a lasting issue with the federal government along with remaining challenges with title and lease transfers.

According to Contura attorney Damian Schaible, a closed sale would immediately put 500 employees back to work. Contura was the only bidder and expects to pay $33,750,000 for the Wyoming mines in addition to the Pax Surface Mine in West Virginia. Deep financial issues pushed the Appalachian-based coal company to file for Chapter 11 bankruptcy on July 1. The move put nearly 600 miners out of work in Wyoming, though a skeleton crew has since secured Eagle Butte and Belle Ayr mines.

The remaining issue stems from major debt with the federal government. A filing on behalf of the Department of Interior states Blackjewel owes over $50 million in overdue unpaid rental payments, royalties, income taxes, and other amounts to the government. Debtors require approval from the federal government to be able to mine and take control of the property. Fred Westfall, assistant U.S. attorney, said moving forward with a sale that doesn't pay back federal debt creates a bad precedent.

"Contura wants to change the terms of how the arrangement would be done for mining in the Wyoming mines and more or less substantially change the terms that would normally apply in the lease situation," Westfall said.

Earlier in the hearing, Blackjewel Attorney Stephen Lerner put the onus on the federal government to help move the deal forward.

"The Trump administration, who has repeatedly said that it wants to do everything it can to help the coal miners, may ultimately be the party who kiboshes the entire sale." Lerner said, "if they want to help out the coal miners in the West, they need to reach an agreement."

U.S. Attorney Westfall disagreed vehemently.

"The only reason all of us are here is because the former management of the company basically drove this company into the ground," he said. "It's just unfathomable that they could manage to drive a company into the ground with a revenue stream that they had. That's the reason we're here. That's the reason the miners are out of work. It's not due to the federal government."

Contura attorney Schaible clarified there could be a payment plan using free cash flow and ongoing royalties to begin handling government debt. No deal is set in stone. A deal with Campbell County, which is owed over $17 million in taxes, is still not finalized or public.

It's unclear if or when the government will approve the deal. The next steps in finalizing Contura sale are still not clear.