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December 21, 2018 – The Court hearing the Mission Coal Company case issued an order [Docket No. 490] approving (i) bidding procedures in respect of the sale of the Debtors’ assets and (ii) the proposed $145mn credit bid of the Debtors’ debtor-in-possession (“DIP”) lenders (the “DIP Lenders”). On December 5, 2018, the Court had previously granted the Debtors’ motion to enter into an asset purchase agreement with the DIP Lenders pusuant to which those lenders would serve as a stalking horse bidders in a section 363 assets sale (the “Stalking Horse Purchase Agreement”) [Docket No. 395].
In the motion requesting authority to enter into the Stalking Horse Purchase Agreement [Docket Nos. 393 and 394], the Debtors state, “The DIP Lenders have agreed to provide the Stalking Horse Bid to set the floor price for certain of the Debtors’ assets, in the form of a credit bid by the DIP Lenders pursuant to the terms of the Stalking Horse Purchase Agreement. The Debtors have determined, in the exercise of their business judgment, that the best way to maximize the value of their assets for all stakeholders is to market-test the Stalking Horse Bid through an auction process and to expeditiously sell the assets to the highest or otherwise best bidder (or bidders)….The Debtors also seek authority to enter into the Stalking Horse Purchase Agreement with the Stalking Horse Bidder, which importantly, does not provide for a break-up fee or expense reimbursement and will serve as a competitive baseline bid for the auction for the Debtors’ assets.”
Below is the summary of key terms of the Stalking Horse Purchase Agreement:
- Purchase Price – Credit Bid: $145,000,000.00. Prior to the hearing approving the Sale in March, the Company will come to agreement with the Stalking Horse Bidder on the amounts of various escrow accounts necessary to fund professional fees, pre-closing payroll obligations and chapter 11 administrative expenses and wind-down costs.
- Bid Protections – Breakup Fee: None. Expenses Reimbursement: None
- Acquired Assets – Generally, Buyer is purchasing all assets related to the operations of Maple Eagle (West Virginia) and Oak Grove (Alabama) mining facilities. Buyer is going to acquire certain assets of Pinnacle and has the right between signing and closing to determine what assets of Pinnacle and Seminole Alabama that it will acquire.
- Excluded Assets – Buyer will not be acquiring certain assets, namely assets under benefit plans, employee records and files, tax returns, the North River Mine and Kellerman Mine, and any entities (subsidiaries).
- Sale of Assets Free and Clear of Interests – On the Closing Date, the Acquired Assets will be transferred to Buyer free and clear of all obligations, Liabilities and Encumbrances (including all successor liability and any successorship obligations under any Collective Bargaining Agreement, and/or with respect to any Benefit Plan), other than the Permitted Encumbrances and the Assumed Liabilities.
The Court scheduled an auction date, if needed, of February 27, 2019.
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