By Scott Robertson
It appears Alpha Natural Resources will garner a $325 million credit bid and a $339.5 million cash bid in the sale of its core assets. The sale is part of Alpha’s Chapter 11 reorganization.
As this issue of The Business Journal went to press, U.S. Bankruptcy Court was in the process of determining whether to approve the cash sale of certain assets to Vantage Energy Appalachia II, LLC. Vantage was named the successful bidder for the assets of Pennsylvania Land Resources, LLC, (PLR) an Alpha subsidiary in Southwest Pennsylvania with a cash bid of $339.5 million in an auction held May 16.
When the auction process was announced Feb. 8, a stalking horse bid of $500 million was put in place for Alpha’s core assets. That credit bid included $175 million for the PLR assets, which in large part are made up of oil and natural gas holdings.
On April 12, Rice Energy Inc. announced that its affiliate, Rice Drilling B, LLC, had entered into a $200 million stalking horse asset purchase agreement with Pennsylvania Land Resources to acquire the PLR assets, subject to higher and better offers from competing, qualified bidders.
The auction for those assets resulted in the Vantage bid being designated as the successful bid. A $335 million bid was also designated as the Next Best Bid for those assets. U.S. Bankruptcy Court approval is required before the agreed-upon acquisition by Vantage can close.
With the PLR assets separated, the Alpha board did not qualify any bids for the remaining core assets, according to court documents, “because all of the alternative proposals that (Alpha, referred to here as “the Debtors”) received, as applicable: (a) provided no additional value to the Debtors’ estates; (b) were not economically viable, in the Debtors’ business judgment; (c) contained speculative financing or other contingencies; and/or (d) represented a material increase in risk related to completing the Debtors’ restructuring.”
As a result, the proposed auction of the rest of the reserve price assets was cancelled and, on May 13, Alpha filed a notice designating the stalking horse bid as the successful bid for such assets. That bid, with the PLR assets pulled, was a credit bid of $325 million.
“While we were not surprised with the interest the PLR Assets generated from operators in the region, the strategic sale of these assets will only help to maximize the value of the estate for the benefit of all stakeholders,” said Alpha’s Chairman and CEO Kevin Crutchfield in a written statement released May 17. “We continue to forge ahead toward the final phase of our restructuring.”