Businessman blames creditors for mine purchase failure

Tom Clarke, the Virginia billionaire who was the only bidder to buy the Kemmerer coal mine from bankrupt Westmoreland Resource Partners, said creditors are to blame for the sale falling through. (FILE PHOTO)

CASPER — The Virginia businessman whose attempt to buy the Kemmerer coal mine in western Wyoming failed this month blamed the busted bid on the creditors of the bankrupt coal company Westmoreland. 

The Kemmerer mine is owned by Westmoreland Resource Partners. As part of the bankruptcy process, the troubled coal firm was set to sell the coal mine to Tom Clarke for $7.5 million in cash and more than $200 million in secured promissory notes. There was also the challenge of bonding — secured funding for cleaning up the large open surface mine. 

During a private status conference call Tuesday, April 30, to discuss Westmoreland’s creditors’ attempt to block Clarke from buying the mine until reclamation was secured, it was disclosed that Clarke would no longer be purchasing the Kemmerer mine due to his failure to provide bonding terms prior to an April deadline. 

Clarke rebutted that narrative in a call with the Casper Star-Tribune, arguing that he had been ready to acquire the mine as early as mid-March and had obtained a bonding package. However, the lenders became inflexible, he said. The impending sale fell short as the first-in-line lenders that Westmoreland is indebted to balked at the deal offered by Clarke, the businessman maintained. 

“We had everything,” he continued, detailing a plan for bonding that included cash collateral and ongoing payments to equal approximately $14 million paid over the next 10 months and provided by operations from the mine. “We had the money. We had bonding commitments, maybe not the bonding commitments that the creditors wanted, but they were the only bonding commitments available.” 

The deadline for the sale closure was extended from April 15 to 25. Clarke said he received a letter from the creditors’ attorneys asking for more time. After the first extension, Clarke said he was approached by the creditors asking for another. 

Clarke said he wasn’t interested in an extension, but he still wanted a deal. The deadline passed and the asset purchase agreement cleared by the bankruptcy court expired. 

A call to the secured lenders attorneys in Houston, Porter Hedges LLP, was not returned by press time. 

Clarke still wants to buy the mine, he said. 

His interest in Wyoming has expanded to other potential assets, though he declined to disclose which mining operations he was interested in. Clarke said the mine-to-plant operations, in which a coal mine feeds directly to a power plant, could be kept open for years to come with the right strategy. 

Wyoming has been facing increasing concern over the potential closure of power plants like PacifiCorp’s Naughton plant — which is the chief purchaser of the Kemmerer mine’s coal, a relationship that goes back to the 1950s. PacifiCorp has a coal supply agreement with the mine that ends in December 2021. 

As coal is pummeled in a power market where cheap natural gas is replacing the black rock as a fuel source, companies like PacifiCorp have become more interested in closing uneconomic coal plants in favor of new wind or gas power. 

The utility disclosed recently that closing Naughton and other coal plants by 2023 would save customers $12 million. 

Clarke said his ongoing interest in the Kemmerer mine, and other mine-to-plant operations in Wyoming, is based on his belief that he has a solution to the trend of retiring coal plants. 

“Rather than have a sudden announcement of early termination of power plants, there ought to be a longer term plan so that a community like Kemmerer can figure out a new economic base,” he said. 

Clarke first got involved in Westmoreland as a shareholder. He said he and his wife were at one point the largest private shareholders in the company. With the bankruptcy, Clarke saw an opportunity to take over the mining operations. Clarke had made a similar, surprising move in 2015, when he acquired coal assets in Appalachia from the bankruptcy of Patriot Coal — a spinoff of Peabody Energy in the early 2000s that took on some of the coal giant’s liabilities and operations in Appalachia. 

Patriot went bust after five years, declaring bankruptcy in 2012. It entered bankruptcy again in 2015, when Clarke picked up a number of coal mines from Patriot, including a number that were not operating. 

Clarke considers those mines his success stories in coal. Those once-fallow mining operations from Patriot have generated nearly 1,000 jobs under his ownership, Clarke said. 

The businessman, who’d started out in nursing homes and health centers, said in a previous interview with the Star-Tribune that he became interested in coal when its decline played a role in shutting a struggling local hospital in Virginia. He’s had a number of high-profile acquisitions or projects in his home state, including a public spat with current Gov. Jim Justice over coal pollution in Appalachian waterways. 

Few of Clarke’s public ventures have gone smoothly, and a number of critics have risen in their wake. 

The state of Ohio opposed the sale of Westmoreland coal assets to Clarke when they went before the bankruptcy judge, arguing that Clarke and his wife, Ana, did not appear to have the money to support reclamation associated with those sites. 

In March, the Sierra Club asked a U.S. district court judge in West Virginia to force Clarke to pay $6 million that the environmental groups claim he has failed to pay – payments to an environmental nonprofit that were part of a settlement agreement for coal-polluted waterways in Appalachia. 

Clarke also ran into trouble in the iron ore business in Minnesota, picking up assets from a bankruptcy in 2016. He was later booted from his role as an executive in the iron ore companies, ERP Iron Ore and Chippewa Capital Partners, at the insistence of the other investors, according to reporting at the time from Business North, a Minnesota business news publication based in Duluth. 

In a previous interview with the Star-Tribune, Clarke said that the iron ore experience was a lesson learned concerning with whom to partner. 

With the Kemmerer acquisition in limbo, Clarke argued that he is like a bride left standing at the altar. However, he said he is still willing to negotiate with the mine’s debtors. His style is in part a social one, making connections locally in Kemmerer, he said. 

“For the sake of the miners and the community, I hope, if not me, they find somebody else. But there are not too many people left,” he said. “There are people that are like ‘Write me a check and we’ll take over,’ but real mining companies? You’re not going to find Arch or Peabody coming [out there].”

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