- In May, Patriot selected Blackhawk as stalking horse
- Blackhawk's production has grown to 11 million tons, annually
Blackhawk Mining LLC said it’s the winning bidder in a bankruptcy auction for most of Patriot Coal Corp.’s assets.
Patriot in May selected Lexington, Kentucky-based Blackhawk as the so-called stalking horse in an auction to set a benchmark price for most of the bankrupt producer’s assets. Earlier that month, Patriot filed for Chapter 11 for the second time in less than three years.
Blackhawk has been feasting on defunct companies. The producer, owned by Mitch Potter, son of a Kentucky coal entrepreneur and backed by Stellus Capital Investment Corp., bought assets from James River Coal Co. out of bankruptcy last year.
“As part of the winning bid, Blackhawk intends to acquire a number of Patriot’s active mining operations including the Panther, Rocklick, Wells, Kanawha Eagle, Paint Creek and Midland Trail mining complexes,” the company said in an e-mailed statement.
Under terms of the deal, Blackhawk will issue new debt securities and Class B units to Patriot’s secured lenders giving them an ownership stake in the company, the statement showed.
Patriot will seek court approval of the sale as part of its plan to exit bankruptcy, which is set to be heard Oct. 5.
Some creditors and state environmental agencies have challenged the plan saying it isn’t feasible. Barclays Plc’s consumer-banking unit, an agent for a group of secured lenders owed about $200 million, recently asked the court to convert the bankruptcy case to a formal liquidation arguing that it would receive better treatment.
The West Virginia Department of Environmental Protection opposes the plan saying it doesn’t provide adequate coverage for environmental clean-up costs.
Blackhawk’s strategy is to expand steelmaking and thermal coal reserves in the face of the industry’s worst downturn in decades, Jesse Parrish, Blackhawk’s vice president, said in a Sept. 17 presentation at an industry conference in Pittsburgh.
Potter founded the company in 2010 and its production has swelled to 11 million short tons from 1 million tons, Parrish said.