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Blackhawk mining says it has reached agreements with creditors, will file bankruptcyFree Access

A third mining company in a month in this area has announced it will file for bankruptcy.

Blackhawk Mining, which operates mines in Floyd, Breathitt, Knott, Perry, Leslie and Magoffin counties, in West Virginia and in Indiana, this morning announced that it has reached agreements with “over 90% of its lenders” that will allow it to stay in business “with no disruption to employees, vendors, customers, or operations.”

Blackhawk, based in Lexington, made the announcement this morning. Its companies include Blue Diamond, Pine Branch, and Spurlock in Kentucky; Hampden Coal, Blue Creek Mining, Panther Creek, Kanawha Eagle, and Rockwell Complex in West Virginia; and Triad in southwestern Indiana.

Below is the press release sent out this morning by Blackhawk’s chief financial officer, Jesse Parrish. More information will appear in tomorrow’s edition of The Mountain Eagle.

Blackhawk Mining Reaches Agreement with Lenders to Restructure Balance Sheet and Reduce Debt with No Disruption to Employees, Vendors, Customers, or Operations.

LEXINGTON, KY – Blackhawk Mining, LLC (“Blackhawk” or the “Company”) today announced that it has reached an agreement with over 90% of its lenders on the terms of a financial restructuring. The transformative transaction will eliminate over 60% of the Company’s total debt and provide over $150 million of incremental liquidity. The transaction will be effectuated through a “pre-packaged” bankruptcy filing that will allow the process to move swiftly to completion within 60 days and with no disruption to the Company’s employees, customers, or vendors.

Blackhawk has entered into a Restructuring Support Agreement with over 90% of its lenders and more than 80% of its equity holders and has commenced solicitation on a plan of reorganization. To facilitate the restructuring, Blackhawk and substantially all of its wholly-owned subsidiaries will file voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court of Delaware. The Company, its lenders, and its equity holders have agreed to the terms of the plan of reorganization, which will be subject to approval by the Bankruptcy Court.

Under the plan, the lenders under Blackhawk’s first and second lien term loans will receive a combination of debt and equity. Specifically, on the effective date of the plan, the Company’s $639 million first lien term loan will be discharged and lenders will receive 71% of the Company’s equity and a newly issued $375 million first lien term loan. The Company’s current $318 million second lien term loan will also be discharged and lenders will receive 29% of the Company’s equity. Based upon the Company’s current projections, pro forma leverage will be less than 2.0x debt to EBITDA and in line with industry peers.

To further strengthen the business, the Company will receive $50 million of new money debtor- in-possession (DIP) financing from certain of its lenders that will be part of the exit facility for the Company. Blackhawk has sufficient liquidity to continue normal mining operations and to meet its obligations in the ordinary course. This includes funding employee wages and benefits, paying vendors and suppliers for all goods and services, and providing customers the same high- quality products and outstanding service they have come to expect from Blackhawk.

“Today’s announcement represents a significant step in our ongoing efforts to position Blackhawk for long-term success,” said Jesse Parrish, Chief Financial Officer. “After carefully evaluating our options, we determined that implementing these agreements through a court- supervised process represents the best way to solidify our financial position while ensuring no disruption to our employees, customers, or vendors. We are equipped with low-cost, well- capitalized assets and an industry-leading team of coal miners and industry professionals. We are excited about the future at Blackhawk and look forward to continuing our valued relationships with customers and suppliers for the long term.”

Blackhawk Mining will file various first day motions with the Bankruptcy Court in support of its reorganization. The Company will continue to pay employee wages and provide healthcare and other benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms for goods and services provided both prior to and after the Chapter 11 filing date. The Company expects to receive Bankruptcy Court approval for these requests.

Additional information is available by calling a toll-free hotline at 1-844-627-6268 to address specific questions and concerns. In addition, court filings and other documents related to the reorganization proceedings are available on a separate website administered by Blackhawk’s claims and noticing agent, Prime Clerk, at cases.primeclerk.com/blackhawkballots.

Kirkland & Ellis LLP is serving as legal advisor, Centerview Partners LLC is serving as financial advisor and investment banker, and AlixPartners is serving as restructuring advisor.

About Blackhawk
Blackhawk is a privately owned coal mining and marketing company headquartered in Lexington, Kentucky. The company operates ten mining complexes across West Virginia and Kentucky with approximately 2,800 employees. Blackhawk primarily sells metallurgical coal to a diverse array of domestic and international steel producers and industrial customers.

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