A coal company that owns two Floyd County mining operations is planning to file for a financial reorganization under Chapter 11 bankruptcy.

Blackhawk Mining, LLC announced on July 15 that reached an agreement with more than 90 percent of its lenders on the terms of a financial restructuring.

“The transformative transaction will eliminate over 60 percent of the company’s total debt and provide over $150 million of incremental liquidity,” a press release said. “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 entered into a Restructuring Support Agreement with over 90 percent of its lenders and more than 80 percent of its equity holders and is solicitation a plan of reorganization, the press release said.

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 press release said.

Blackhawk, 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 percent 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 percent 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 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, according to a statement.

Additional information is available by calling a toll-free hotline at, (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 https://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.

Blackhawk, headquartered in Lexington, is listed by the Mine Safety and Health Administration as controller for the Spurlock Plant and Redhawk Mining in Floyd County, as well as other mining complexes in Kentucky and West Virginia.

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