Federal judge approves NTEC's purchase of coal mines in Wyoming, Montana
FARMINGTON — The Navajo Transitional Energy Company received approval from a federal judge to purchase three coal mines in northeast Wyoming and southwest Montana from Cloud Peak Energy, a company that filed bankruptcy this year.
NTEC, a business entity of the Navajo Nation, announced on Aug. 19 that it will acquire the Antelope and Cordero Rojo mines in Wyoming and the Spring Creek Mine in Montana. The sale includes the Sequatchie Valley reclamation project in Tennessee, according to Cloud Peak Energy.
The company stated that the deal — along with its current operation of Navajo Mine near Farmington — is projected to increase its annual revenue to more than $1 billion and provide more financial resources to the tribe.
The three mines are in the Powder River Basin, an area known for its coal deposits, and each operation supplies coal to electric utilities throughout the United States. Additionally, the Spring Creek Mine exports coal to Canada and Asia.
Cloud Peak Energy filed for bankruptcy in federal court in Delaware in May, entering with $400 million in debt, the Casper Star Tribune reported.
The sale was part of the company's Chapter 11 process and it named NTEC as the winning bidder on Aug. 16 and the bankruptcy court approved the transaction three days later.
According to court documents, Cloud Peak Energy received bids for all its assets from three companies — NTEC, Aspen Coal and Energy LLC, and Lighthouse Resources Inc.
Court documents further state that NTEC will pay $15.7 million in cash to Cloud Peak Energy to acquire the operations. Additional components include a $40 million second lien promissory note and payment of royalties for five years from coal produced at the three mines.
NTEC also agreed to assume pre- and post-petition tax liabilities, royalty payments to the federal and state governments, all reclamation obligations, up to $20 million in post-petition accounts debts, and the carve-out of certain parcels of real estate that Cloud Peak Energy may sell to third parties.
NTEC was the only bidder with committed surety bonding and required no third-party financing, according to court documents.
The tribal enterprise also demonstrated the adequate assurance of future performance to Cloud Peak Energy based on its experience of owning the Navajo Mine.
Cloud Peak Energy President and CEO Colin Marshall said in a press release the company achieved an outcome that supports its stakeholders' interest and the three mines will operate as normal while the deal is finalized.
"We look forward to completing the transaction and enabling our mines to remain a reliable source of high-quality coal for customers for many years to come," Marshall said.
NTEC Management Committee Chairman Tim McLaughlin called the purchase "exciting and historic" in a press release from the company.
"Indian tribes have long had a deep connection to the earth, and for the first time, a tribal company will now lead thoughtful and diligent energy development on a national level," McLaughlin said.
The transaction is expected to close in October, according to Cloud Peak Energy.
This latest acquisition by NTEC comes two weeks after investing in Texas Mineral Resources Corp., a company exploring future mining of heavy rare earths and other industrial minerals near El Paso.
Noel Lyn Smith covers the Navajo Nation for The Daily Times. She can be reached at 505-564-4636 or by email at email@example.com.
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