Coal producer Alpha Natural Resources Inc. received court approval Thursday for a bankruptcy plan which includes the sale of certain core assets to lenders and outlines how to pay for cleanup of mines that have closed or might yet close.
Contura Energy Inc., a newly-formed group consisting of Alpha Natural Resources' first-lien lenders, will purchase the company's two Powder River Basin mine complexes in Wyoming and three in West Virginia and Virginia, among other assets, the company said Thursday.
Contura will also provide Alpha with a $35 million credit line and will contribute up to $100 million to help Alpha's ongoing reclamation activities.
Bristol, Virginia-based Alpha Natural Resources, once one of the nation's biggest coal producers, filed for Chapter 11 last August. The coal industry has been decimated by the historic shift in the electric power sector brought on by cheap natural gas and stricter pollution regulations.
Alpha expects to operate as a private company when it emerges from bankruptcy protection later this month. The plan was approved by U.S. Bankruptcy Court for the Eastern District of Virginia.
The plan also provides for Contura to shore up its environmental bonding obligations in Wyoming and West Virginia. The new company would substitute self-bonds, which allow companies to promise to pay for mine reclamation instead of setting those funds aside in advance, with cash or other types of bonding.
Alpha Natural Resources has had more than $650 million in self-bonding obligations in the two states.
Environmental groups and Interior Secretary Sally Jewell, who oversees the federal Office of Surface Mining Reclamation and Enforcement, have expressed concern coal bankruptcies could leave taxpayers responsible for cleaning up self-bonded coal mines.
"The terms of the settlement provide a managed route for the company to restructure and continue operating, while also taking responsibility for mine land reclamation as a result of former disturbances of private and federal lands," Interior Department spokeswoman Jessica Kershaw said in a statement.