Cloud Peak moves to sell assets to New Mexico company

BROOMFIELD — A U.S. Bankruptcy Court judge seems poised to approve the sale of “substantially all” of the assets of Gillette, Wyoming-based Cloud Peak Energy Inc., which maintains administrative offices in Broomfield.

Cloud Peak Energy Inc. filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware in May, listing $928.66 million in assets and debts of $634.99 million.

The company, which operates the Antelope and Cordero Rojo coal mines in Campbell County, Wyoming, and the Spring Creek mine in Montana, on Friday filed a proposed order to sell its assets to Farmington, New Mexico-based Navajo Transitional Energy Co. LLC, the winning bidder in an auction conducted Aug. 15 to Aug. 16.

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“The total consideration provided by the Purchaser for the Purchased Assets is the highest or otherwise best and most feasible offer received by the Debtors,” attorneys for Cloud Peak stated in a bankruptcy-court filing.

Under terms of the proposed sale, Navajo’s winning bid would include:

• Payment of $15.7 million in cash.
• A $40 million promissory note on assets of Cloud Peak and Navajo.
• A 15-cent-cent-per-ton royalty, payable quarterly for five years, on all tons of coal produced and sold at the Antelope and Spring Creek mines and on all tons produced and sold in excess of 10 million tons per year at the Cordero Rojo mine.
• A carve-out of certain parcels of real estate that Cloud Peak may sell to third parties.
• Assumption of pre- and post-petition non-income-tax liabilities and coal-production-related royalties of approximately $93.92 million.
• Assumption of $20 million of post-petition accounts payable.
• Cash to fund about $780,000 in cure costs.

Numerous parties — including the U.S. government — had filed objections to the proposed sale, but U.S. bankruptcy court judge Kevin Gross at a hearing on Monday indicated that he was inclined to approve the sale, pending Cloud Peak working through remaining issues with creditors.