Tom Clarke The Back-Up Bidder On Cloud Peak Mines

Aug 21, 2019

Identical Business Address from three LLCs - all linked to Tom Clarke
Credit Multiple Secretary of State Websites

Virginia businessman Tom Clarke, who recently came close to owning Westmoreland's Kemmerer mine, appears to be the back-up bidder in Cloud Peak Energy's asset sale. That comes despite his name not being immediately connected to the LLC in public court documents.

The business address of Aspen Coal & Energy, LCC (Aspen) matches up with two other Tom Clarke-led LLCs in Merida Natural Resources and Western Coal Acquisition Partners in Roanoke, Virginia. In the articles of organization for the company, the entity forming the company was Clarke Investments, LLC.

Clarke was the winning bidder for Westmoreland's mine in southwest Wyoming earlier this year, but couldn't come to an agreement with the company's creditors. The president and CEO of Kissito Healthcare could not secure adequate reclamation bonding ahead of an April 2019 deadline. That same issue was a factor in the Cloud Peak asset sale. Aspen was formed immediately after the failed bid on May 1.

Centerview Partners LLC, the investment firm advising Cloud Peak Energy, chose Aspen as the baseline bid saying it provided the most distributable value to the estate at $283.33 million. But the investment firm chose Navajo Transitional Energy Company, LCC (NTEC) for several reasons including that it was the only bidder with committed surety bonding and had low credit risk.

Clarke had previously discussed interest in expanding his position in coal out west. In February of this year, a Merida news release related to the Kemmerer mine stated, "if acquired, Kemmerer will play a leading role as Merida's western 'Flagship' mine, as Merida continues its expansion throughout the western coal basins."

It's also not a surprising turn for Peter Morgan, a staff attorney with Sierra Club.

Article of Organization screenshot
Credit CO Secretary of State

"Ever since the Patriot Coal bankruptcy, which primarily involved Appalachian mines in 2015, Clarke has had a presence in nearly every mine operator bankruptcy," Morgan said. Clarke purchased several mines from Patriot Coal in 2015.

Clarke discussed his interest in the industry in a New York Times interview in 2016. NYT reported, "he has come up with a model, he said, for how the industry can keep producing coal, while reducing its impact on the climate."

Morgan explained, "he apparently sees an opportunity in these bankruptcies to try to acquire mines on the cheap. And in many cases, he offers little cash but agrees to take on the reclamation obligations."

He also tried to purchase Westmoreland mines in Ohio, but was rebuffed by state officials. The Casper Star-Tribune reported in May that the state's attorneys were, "highly concerned whether the buyers of the Oxford Mines and the Buckingham Mine have the assets to fund all reclamation and surface water mitigation requirements."

While NTEC was chosen as the winning bid, Aspen could still have a shot to purchase Cloud Peak's mines should something fall through. If that happened, Morgan said it's unlikely Clarke would succeed due to reclamation issues.

Morgan said he could have created another LLC in order to insulate the different mines he acquires from each other.

"Given that he has run into trouble with some [mines], I think by spreading his acquisition to out through different companies, he may be trying to prevent all of them from going down if he has to file bankruptcy for one or more of the existing minds," he explained.

Dan Cohn, a regional organizer for the Western Organization of Resource Councils, originally pointed out the business address similarity.

Wyoming Public Radio reached out to Tom Clarke and his corporate office, but did not get a response in time for publication.