The loan will be used for operational expenses during its bankruptcy case, and $75 million has been earmarked for reclamation costs tied to a deal between Arch and state regulators in Wyoming. Some smaller lenders had opposed the financing request, arguing that the producer had enough money to continue operations during its Chapter 11, and environmentalists had opposed to the dollar amount decided upon in the reclamation agreement.
Arch has been anticipating completing its restructuring by fall, a process that company spokeswoman Logan Bonacorsi said is ongoing and still on target. “We believe we have the essential components in place and intend to emerge a stronger and more competitive company,” she said.
More recently, Arch announced it would suspend its state permit application for the proposed Otter Creek mine in southeastern Montana. The Otter Creek reserves, located near Ashland, are contained within 8,300 acres of state-owned minerals, which it has held lease rights to since 2010; it secured them from the Montana Land Board at that time for $86 million. The company subsequently submitted its surface permit application in 2012.
“Since , Arch has engaged state regulators through the permitting process in order to obtain the approval to mine,” the company said. “That process has taken longer than anticipated, and further deterioration in coal markets has led to the decision to suspend the permitting effort.”
In related news, the Wyoming Department of Environmental Quality (DEQ) and Arch Coal have reportedly agreed upon a self-bonding deal and will accept about $75 million instead of the company’s bonding obligations tab of $486 million as Arch continues through its bankruptcy.
According to the Casper Star Tribune, the documentation to formalize the agreement was filed February 9 in the Missouri bankruptcy court where Arch’s case is being processed. Wyoming will now be a priority creditor, allowing it to collect some of Arch’s obligations as needed.
Previously, the agreement between the company and the DEQ outlined that it wouldn’t need to post bond for its assets in Wyoming so long as it could present proof of its ability to cover any potential reclamation costs.
Wyoming DEQ spokesman Keith Guille said the agreement will allow the company’s mines to stay open and to continue ongoing reclamation efforts. “Being able to enter into this agreement is positive for all of Wyoming, and its taxpayers, and the environment,” he said.