Navajos expand coal-mining operations

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.

Navajo Mine is located on the Navajo Nation, a vast Indian reservation that spans three states and has boundaries that encompass 27,000 square miles of traditional Navajo homelands. As such, Navajo Mine has an 85 percent workforce that are Native Americans, most of whom are Navajo.
A coal sale agreement between Navajo Mine and Four Corners Power Plant ensures the mine is operational through 2031, thus providing secure jobs that many families will continue to prosper and increase their quality of life for years to come.