Wyoming News Exchange

Miners wait for word on Blackjewel purchase
 
By Greg Johnson
Gillette News Record
Via Wyoming News Exchange
 
GILLETTE — Wednesday wasn’t a good day for Melissa Peterson-Worden.
Like nearly 600 of her Blackjewel LLC coworkers locked out of the Belle Ayr and Eagle Butte mines in Campbell County since July 1, she’s spent the last three weeks hoping she’ll be called back to work while applying for new jobs.
Down to the last $432 in her bank account, Peterson-Worden got two rejection letters from potential employers Wednesday and said feelings of despair had started to creep into her outlook for the near future.
“It was a hard day for me, that’s for sure,” she said.
But the pendulum has been swinging freely Thursday morning.
She woke up Thursday to learn she may be called back to work soon because Blackjewel LLC has reached a deal to sell the Belle Ayr and Eagle Butte surface coal mines in Campbell County along with a mine in West Virginia.
If approved, Contura Energy would become the stalking horse bidder for Blackjewel’s western assets, along with the Pax Surface Mine in West Virginia, according to a motion filed early Thursday morning with the U.S. Bankruptcy Court for the Southern District of West Virginia.
The linchpin of the deal is the $20.6 million in cash Contura will put down as a deposit that the company can use immediately to continue to keep up its shuttered coal production operations around the United States.
The agreement may be good news for the nearly 600 workers locked out of its Wyoming mines, but will still leave about 1,000 workers at 29 other Blackjewel properties in limbo. After three weeks of negotiating with creditors and potential buyers, it’s the only deal Blackjewel could get that allows the company to avoid filing a straight Chapter 7 bankruptcy liquidation, the motion says.
While other Wyoming Blackjewel workers have already found other jobs, Peterson-Worden said she “absolutely wants to go back” and that she wants the Eagle Butte and Belle Ayr mines to continue to be important parts of the Powder River Basin coal community.
“My loyalty is not to Blackjewel, it’s to Eagle Butte, Belle Ayr and this community,” she said. “When I first read (the news about a potential sale), I thought I’d be, like, ‘Oh my God, it’s over!’ But my first thought was actually, ‘What about the (workers in) the East?”
She said it’s difficult to be too happy for herself knowing that 1,000 others at Blackjewel’s Appalachia mines may never get their coal mining jobs back.
“My next thought then was, ‘OK, if we need to hire anyone from the East, I have an extra bedroom and 3 acres they can park a camper on,” Peterson-Worden said. “I really thought the reaction would be, ‘Thank God it’s over,’ but it wasn’t. It’s been tainted with this other bit of sadness for them.”
The stalking horse sale will allow Contura or another entity that bids more to operate the mines “for an estimated minimum of six to 12 years,” Blackjewel’s motion says.
Blackjewel will have an emergency hearing at 12:30 p.m. Thursday to present its motion to the bankruptcy court. If approved, it could bring Contura Energy full circle with the Belle Ayr and Eagle Butte mines.
Contura was formed as a stalking horse bidder for the mines when they were sold during the 2015 bankruptcy of Alpha Natural Resources. It operated the mines until selling them to Blackjewel in December 2017 in a deal for no money, but in which Blackjewel assumed debt and liabilities associated with the mines.
Contura has a financial stake in seeing the mines remain open because it still holds the permit to operate in Wyoming and is still on the hook for guaranteeing nearly $250 million in reclamation obligations, said Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming.
Because of that, Contura was compelled to work out a stalking horse bid to protect its interests in the Wyoming mines, he said.
“I’m not surprised by this,” he said. “The bottom line is they have to get those mines back open. The fact that there’s a stalking horse bidder means they’ve come to terms with a minimum bid and it ensures Contura just doesn’t get passed the ball again.”
Blackjewel filed for Chapter 11 bankruptcy reorganization the morning of July 1, then hours later abruptly shut down its coal operations in Wyoming, Virginia, Kentucky and West Virginia. The move locked out about 1,700 employees and began a spectacle that’s seen failed attempts to secure financing to carry the company through bankruptcy, a coup by creditors to oust former president and CEO Jeff Hoops and more than 1,000 employees left with bounced final paychecks.
Godby also said that in the weeks since the company’s initial bankruptcy filing, it’s become clear its current debt holders aren’t willing to put up any more money to reopen or operate the mines.
“Since Jeff Hoops has been shoved out, it hasn’t looked like any Blackjewel creditor has been willing to take it over,” he said. “That’s been the going assumption the past week and a half.”
It’s also imperative Eagle Butte and Belle Ayr open and begin producing again soon to not only generate needed cash from sales, but to protect its contracts. Just this week, Blackjewel’s longest tenured and largest customer in Kansas has asked the court for permission to sever its contract if it can’t get coal from the Eagle Butte mine, which is its exclusive supplier.
“These are not bad mines. They’ll produce cash flow,” Godby said. “Typically, the third quarter is the best quarter for coal. They need to get moving because of those potentially lost customers. And in the Powder River Basin, that will change the outlook a little bit because you suddenly get about 10 percent more production coming back online.”
If approved by the court and Contura is the winning bidder, the deal won’t include any other money other than the deposit. Instead, Contura will assume the hundreds of millions of dollars in liabilities associated with the mines, including paying locked out employees for hours worked before the lockout.
The motion also asks the court to do away with the company’s 401(k) program, which means the operator will no longer be responsible for paying employee contributions through to their retirement accounts. It would not mean workers will lose money already in their 401(k) accounts.
It’s not the outcome Blackjewel wanted and still leaves big questions about what happens with its dozens of other shutdown properties and about 1,000 employees. The company said this has become the only viable option.
“The Debtors and their advisors have determined that the sale process … is the only opportunity to maximize value, avoid a permanent operational shutdown of the Western Mines and the Pax Surface Mine, return as many employees to work as possible and ensure that, ultimately, the necessary reclamation is undertaken with respect to those mines,” the motion says.
Contura also commits to bring back “the majority of employees” to the Belle Ayr and Eagle Butte mines. It’s unclear how many employees are associated with the Pax mine. The federal Mine Safety and Health Administration shows employment there of about 100 people, but no coal production.
The condition that Contura pays the $20.6 million deposit and that the company can use the money immediately “is absolutely critical,” according to the motion. “The stalking horse bid and purchase deposit allow the Debtors and their advisors the breathing room necessary to allow them to focus on what is important — achieving a successful sale (or sales) and getting as many people back to work as quickly as possible.”
Although many of the locked out coal workers have expressed frustration and anger with Blackjewel and its former leadership team under Hoops, they’ll be equally as excited to go back to work for a more responsible company, Peterson-Worden said.
“I guarantee that everybody’s lacing up their boots right now,” she said, adding the news they could be going back to work “is huge, huge. But it’s also not over.”
Cleaning up Blackjewel’s mess and being a good business within the community also carries a lot of weight with the workforce, she said. “If Contura plays their cards right, they’ll have 590 of the most loyal employees you’ve ever seen in your life.”