A judge has approved the sale of three mines in Wyoming and Montana owned by a bankrupt coal company, helping to keep the mines open and allow for repayment of debt.
New Mexico-based Navajo Transitional Energy Company will pay Wyoming-based Cloud Peak Energy Corp. $15.7 million under the deal approved by U.S. Bankruptcy Judge Kevin Gross in Delaware. The company owned by the Navajo Nation will assume Cloud Peak’s debts. That includes a $40 million, second-lien promissory note and up to $20 million in debts accrued since Cloud Peak filed for Chapter 11 reorganization bankruptcy May 10 according to a report in a Wyoming newspaper: The Gillette News-Record.
Navajo Transitional also will pay Cloud Peak’s tax liabilities, make royalty payments and assume all obligations to reclaim the mines if they close. Navajo Transitional has not disclosed its plans for the Wyoming and Montana mines but agreeing to pay future royalties hints that the mines will remain open. That’s according to Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming. Godby says the Navajo Nation could benefit from tax advantages that make the coal operations more competitive.
A Navajo Transitional mine supplies coal to the Four Corners Power Plant in New Mexico, which is scheduled for shutdown in future years. Analysts say the Powder River Basin mines could replace some of that lost revenue.
"They clearly have experience in Western coal," Godby said. "This is basically investing in the best coal basin in the country and potentially keep them in coal."