Blackhawk wins Patriot Coal bankruptcy auction

By Tom Hals

(Reuters) – Patriot Coal said Blackhawk Mining won a bankruptcy auction for the majority of its assets but did not disclose the terms.

Lexington, Kentucky-based Blackhawk had agreed to act as the initial, or stalking horse, bidder for Patriot’s assets, which include mines in West Virginia and reserves in other states.

Blackhawk’s initial bid did not include cash. Instead, the privately held company offered Patriot’s creditors new debt and a stake in the entity that would own the auctioned assets.

The sale is subject to approval by the U.S. Bankruptcy Court in Richmond, Virginia. If the court rejects it, Patriot would begin negotiating with Coronado Coal LLC, which Blackhawk outbid at the auction.

Scott Depot, West Virginia-based Patriot filed for Chapter 11 bankruptcy in May, its second in three years, due to plunging prices for its coal and tighter regulations that have forced some of its peers into bankruptcy.

Late Monday, the company filed papers asking the bankruptcy court to allow it to end its obligation for its 969 non-union retirees, saying no potential buyer of its assets would agree to take on the cost.

“The debtors will lose the ability to fund their operating expenses, much less any other obligations such as retiree-related expenses, within a matter of weeks,” Patriot said in court papers.

Patriot has already asked U.S. Bankruptcy Judge Keith Phillips to allow it to reject its collective bargaining agreement with the United Mine Workers of America. The union has been negotiating with Blackhawk to maintain some benefits.

The case is Patriot Coal Corp, U.S. Bankruptcy Court, Eastern District of Virginia, No. 15-32450.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by David Gregorio and Lisa Von Ahn)

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