Cloud Peak Energy announced Monday it's selling its three Power River Basin coal mines to the Navajo Transitional Energy Company, the winning bidder of its Chapter 11 bankruptcy auction.
The Gillette, Wyo.-based company said the sale, which was approved by a federal bankruptcy judge in Delaware, includes nearly all of Cloud Peak's assets. Navajo Transitional Energy will pay $15.7 million in cash, a $40 million secondary lien on all assets and a five-year royalty on future coal produced.
The New Mexico-based, tribally owned firm will also assume all tax and royalty payments and reclamation obligations up to $20 million. The deal also includes the Sequatchie Valley water reclamation project in Tennessee.
In a news release, Navajo Transitional Energy leaders said they're excited to continue operations of the mines, which employ about 1,300 people, nearly all in Montana and Wyoming.
"NTEC will continue its efforts to lead conscientious energy development while striving to balance job growth and protecting the environment for future generations.” said CEO Clark Moseley in a statement. “We have proven by our extremely successful management of the Navajo Mine that we know the business and are capable of returning the Cloud Peak mines to, safe, stable and profitable operations while maintaining their excellent safety performance and reclamation efforts.”
Cloud Peak owns the Spring Creek mine in Montana and the Antelope and Cordero Rojo mines in Wyoming. Last year, the company sold 50 million tons of coal worldwide and supplied 58 coal plants with $832 million worth of coal.
Cloud Peak had been one of the Powder River Basin's strongest coal companies until recent years, when high debt coupled with slumping demand became too much to bear. The company announced in November 2018 that it was entertaining a sale as stock prices continued to slump.
Cloud Peak stock was soon delisted, and the company filed for bankruptcy in May to ward off creditors , including local governments in Wyoming owed property and coal production taxes.
The sale is expected to close in October, pending approval from a federal bankruptcy judge. Including Cloud Peak assets, Navajo Transitional Energy says it would be the third largest coal company in the United States.
The firm owns the Navajo mine on tribal land in New Mexico.