April 25, 2018 Read More →

Bank Alleges Fraud in Coal Company Asset Dealings

S&P Global Market Intelligence ($):

Fifth Third Bank has sued Revelation Energy LLC for failing to make payments on its loans and alleged that the U.S. coal producer may have fraudulently transferred assets in the company’s acquisition of two large Powder River Basin mines.

The bank wrote in a civil complaint filed in the U.S. District Court for the Southern District of West Virginia that Revelation has missed payments on loans for $20.0 million and $5.2 million while conveying assets to Blackjewel LLC believed to be collateral to the loan. The bank alleges three breaches of contract and claims Revelation owes the bank $6.9 million in principal and nearly $138,000 in accrued interest and late charges as of Jan. 30.

“Revelation and Blackjewel will use any additional time provided by this court to further convey, hide and/or encumber the collateral until there is either nothing left or it is impossible or impracticable to track it down and execute against it,” Fifth Third told the court.

Blackjewel acquired the Eagle Butte and Belle Ayr mines from Contura Energy Inc. in late 2017. According to Contura’s fourth-quarter earnings report, the company paid Blackjewel $21.4 million in exchange for taking on certain liabilities and transaction costs. The assets were among those touted as the “crown jewel” mines of Alpha Natural Resources Inc. when Contura was spun out of Alpha’s bankruptcy reorganization.

Revelation and Hoops-affiliated companies had been snapping up eastern U.S. coal properties before Blackjewel struck the deal for the Powder River Basin mines. In mid-2017, the company reached an agreement to acquire the Lone Mountain coal complex and nearby Central Appalachia properties from Arch Coal Inc. in the area around the Virginia-Kentucky border. Arch noted that margins at the mine had been “thin or negative, and Revelation agreed to assume responsibility for all reclamation and mine closure expenses for the properties.

More ($): Bank Says Revelation Defaulted After Affiliate Picked Up Major Coal Assets

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