The Navajo Nation is in the process of expanding its coal-mining operations with the more than $50 million purchase of the assets of the bankrupt Cloud Peak Energy company in Wyoming.
Cloud Peak filed for Chapter 11 bankruptcy and the Navajo Transitional Energy Company, LCC is the winning bidder of the firm’s assets including three mines in the Sequatchie Valley reclamation project.
The key financial terms of the consideration provided by NTEC include, among others, a $15.7 million cash payment at closing, a $40 million second lien promissory note and a 5-year term royalty on future tons produced. NTEC additionally agreed to the assumption of pre and post-petition tax liabilities and federal and state coal royalty payments, all reclamation obligations, and up to $20 million in post-petition accounts payables. NTEC also agreed to a carve-out of certain real estate parcels, which will be marketed separately by the Company.
NTEC’s binding bid for the Company’s assets is subject to the signing of a definitive asset purchase agreement, which will in turn be subject to approval by the United States Bankruptcy Court for the District of Delaware and certain other closing conditions. A hearing to seek required court approvals is scheduled for August 19, 2019. Subject to Bankruptcy Court approval, the transaction is expected to close in October 2019.