A Virginia businessman will be the newest coal player in Wyoming after being the sole bidder for a bankrupt firm’s coal mine in Lincoln County, according to documents filed in bankruptcy court in southern Texas on Tuesday.
Westmoreland Coal Company’s Kemmerer mine will be sold to former health care executive Tom Clarke’s new company, Western Coal Acquisitions Partners LLC, for $7.5 million in cash at closing, a $112.5 million senior secured promissory note and a $95 million junior secured promissory note, according to a copy of the asset purchase agreement filed Tuesday in the bankruptcy court in Houston.
Clarke’s firm will also assume the Kemmerer coal mine’s liabilities, minus contested costs of continuing health care benefits for retirees and their dependents. A union contract between Kemmerer miners and the coal company is also voided in the sale.
Westmoreland filed for bankruptcy in October, citing about $1 billion in debt and a troubled coal market. The decision left the fate of the 300-employee Kemmerer coal mine in limbo.
Prior to the bankruptcy filing, the company had informed the union representing Kemmerer miners that it intended to cut certain health care obligations to retirees and retiree dependents. The United Mine Workers of America had fought that decision, but the bankruptcy court ruled in favor of Westmoreland’s plea Friday to shave those liabilities. The court also ruled Friday that Westmoreland could abandon the union contract.
The company had argued that its potential buyers had refused to proceed if the mine sale included the contract.
Clarke, Kemmerer’s newest owner, said in a recent interview with the Star-Tribune that the obligations to retirees were too costly. He said the majority of the former contract would be retained. Another of Clarke’s companies, Merida Natural Resources, is a guarantor for the Kemmerer acquisition. Clarke is also acting as a personal guarantor, according to court documents.
The judge’s decision to dissolve the contract does not dissolve the union, which pledged after the judge’s decision to continue fighting for a favorable replacement agreement.
The union has noted that of the 1,500 people affected by the elimination of Westmoreland’s retiree health benefits, about one-third are former miners of Kemmerer and their dependents.
Clarke is a relatively new coal player. He was first successful as a businessman in the health industry as an owner of nursing homes. He has since dabbled in other industries and projects from hotels to iron ore. Clarke got into the coal business by buying Patriot Coal’s Appalachian assets during its bankruptcy in 2015.
Clarke was the stalking horse bidder on other Westmoreland assets in Ohio earlier this month. His bid raised the competing bid from a former owner of those assets. Clarke then stepped out of the bidding war. He said his involvement in the Ohio competition was part of his plan to obtain a favorable deal for his top priority acquisition: Westmoreland’s Kemmerer mine.
Follow energy reporter Heather Richards on Twitter @hroxaner