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article imageKentucky coal producer with 2,800 workers files for bankruptcy

By Karen Graham     Jul 18, 2019 in Business
Blackhawk Mining, LLC., a coal company with 2,800 employees in Kentucky and West Virginia, plans to file for Chapter 11 bankruptcy later this week, according to documents released by the company.
The Lexington, Kentucky-based private company will file for Chapter 11 protection later this week in the U.S. Bankruptcy Court for the District of Delaware.
Blackhawk CEO Jesse Parrish announced on July 15 his company has already reached a deal with 90 percent of its lenders on the terms of the restructuring. If the Bankruptcy Court approves the restructuring plan, it would cancel nearly $1 billion in loans in exchange for turning over ownership to its top lenders.
"The transformative transaction will eliminate over 60 percent of the company’s total debt and provide over $150 million of incremental liquidity,” a press release said. “The transaction will be effectuated through a ‘pre-packaged’ bankruptcy filing that will allow the process to move swiftly to completion within 60 days and with no disruption to the Company’s employees, customers, or vendors.”
Blackhawk owns the Hazard-based Blue Diamond Coal Company, which has several active and inactive facilities in Perry and surrounding counties, as well as the Hazard-based Pine Branch Mining, which has active and inactive facilities in Perry County.
According to the News Express, Blackhawk and “substantially all of its wholly-owned subsidiaries” will each file voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code of the U.S.
The pre-packaged deal is sweet
Specifically, if the plan is approved by the court, the company’s $639 million first-lien term loan will be discharged and lenders will receive 71 percent of the company’s equity and Blackhawk will get a newly issued $375 million first-lien term loan.
The company’s current $318 million second-lien term loan will also be discharged and lenders will receive 29 percent of the company’s equity. And to sweeten the company's business plan, Blackhawk will also receive $50 million of new money debtor-in-possession financing from certain of its lenders that will be part of the exit plan for the company.
The company will continue to pay employee wages and provide healthcare and other benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms for goods and services provided both prior to and after the Chapter 11 filing date.
Blackhawk has roughly 2,800 employees at 10 mining complexes in West Virginia and Kentucky that the company bought from now-defunct coal companies during their own bankruptcies. Blackhawk primarily mines metallurgical coal used in steel manufacturing.
Blackjewel struggles to pay employees
Blackjewel - on the other hand - is struggling to secure financing to reopen mines in Wyoming, Kentucky, West Virginia, and Virginia. The Milton, West Virginia-based Revelation Energy LLC, and its affiliate Blackjewel LLC filed for Chapter 11 bankruptcy in the Southern District of West Virginia on July 1, 2019.
Bankruptcy court documents show the company has already used $3 million of $5 million secured on the condition that CEO Jeff Hoops resign and the money be used to bring back some 140 employees to ensure the safety of the mines and equipment. In the meantime, the rest of Blackjewel's employees are having to deal with paychecks bouncing or not getting a check at all.
"All the employees returning to work have or will be paid for time worked prior to the company’s Chapter 11 filing, and the company fully intends to pay these employees for all hours worked moving forward. The company’s ability to bring more employees back to work is contingent upon its ability to secure additional financing, which remains the top priority for the management team,” the company said in its July 10 statement.
Blackjewel said in court filings it employs about 1,700 employees across Kentucky, Virginia, Wyoming and West Virginia, according to the Bristol-Herald Courier.
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