The West Virginia Department of Environmental Protection (DEP) and Alpha Natural Resources have reached a US$300 million agreement that paves the way for the bonding and reclaiming of all Alpha’s legacy sites in West Virginia, as well as its continuing operations in the state.
Alpha entered bankruptcy in August 2015. In February, the company announced that it would sell its best assets – principally those in Wyoming, but including one small underground mine in West Virginia – to its secured creditors led by Citicorp North America and a group of hedge funds.
The DEP had objected to the sale in filings with the Virginia bankruptcy court on the basis that it had the potential to leave all but one of Alpha’s West Virginia mining sites with insufficient funds for reclamation and water treatment.
The US$300 million agreement between the DEP and Alpha resolves DEP’s objection to the sale and to Alpha’s bankruptcy plan. It includes the posting of US$100 million in additional penal bonds by Alpha, as well as US$39 million in letters of credit or cash bonds.
In addition, the company and its secured creditors committed to providing funding of US$209 million, comprising at least US$109 million from Alpha over the next 10 yrs at legacy sites, US$50 million from the purchaser of its Wyoming operations over the next five years, and up to US$50 million in excess cashflow from Alpha.
The agreement also allows for the continued operation of various mining sites in West Virginia with the profits from these operations expected to support reclamation and water treatment.
The agreement is subject to approval by other states in which Alpha will have continuing operations, as well as various federal agencies. It is also subject to approval by the bankruptcy court as part of Alpha’s bankruptcy plan.
Edited by Jonathan Rowland.