Davis Polk is advising an ad hoc group of first- and second-lien lenders to Blackhawk Mining, LLC, consisting of Solus Alternative Asset Management, Knighthead Capital Management and Redwood Capital Management, in connection with the restructuring of Blackhawk and certain of its affiliates.

On August 29, 2019, the United States Bankruptcy Court of Delaware (the “Bankruptcy Court”) entered an order confirming a plan of reorganization of Blackhawk and substantially all of its wholly owned subsidiaries. Following entry of the confirmation order but before Blackhawk’s emergence from bankruptcy, Blackhawk faced a confluence of unforeseen market headwinds, including a substantial drop in metallurgical and thermal coal prices and limited coal spot market activity. In turn, Blackhawk required an infusion of new capital to fund emergence costs and operations and a greater reduction of indebtedness than provided in the confirmed plan.

On October 2, 2019, following negotiations among Blackhawk and its ad hoc lender groups, the parties reached agreement on an amendment to the existing debtor-in-possession financing term loan facilities (the “Existing DIP Term Facilities”), which, among other things, changed the form of exit payment of the existing roll-up loans thereunder from take-back term loans to equity of the reorganized company and established an additional tranche of new money delayed-draw financing thereunder. This additional tranche includes up to $35 million of new money term loans from certain of the lenders under the Existing DIP Term Facilities, which will have priority of liens and payment with respect to certain collateral and be converted into exit term loans at emergence from bankruptcy. The parties also reached agreement on an amended plan of reorganization (the “Amended Plan”), which reduced debt upon emergence by approximately $290 million.

On October 7, 2019, the Bankruptcy Court approved the financing and notices to creditors summarizing the Amended Plan and giving the creditors the opportunity to change their votes. The Amended Plan has the support of holders of more than 90% of Blackhawk’s prepetition term loans and 97% of Blackhawk’s term loans under the Existing DIP Facilities.

Blackhawk is a privately owned coal mining and marketing company headquartered in Lexington, Kentucky. The company operates 10 mining complexes across West Virginia and Kentucky with approximately 2,800 employees. Blackhawk primarily sells metallurgical coal to a diverse array of domestic and international steel producers and industrial customers.

The Davis Polk restructuring team includes partner Brian M. Resnick and associate Dylan A. Consla. The finance team includes partner Jinsoo H. Kim, counsel David Hahn and associates Yuko Sin and Richard Corbett. The corporate team includes partner Stephen Salmon and associate Shanu Bajaj. Partner Patrick E. Sigmon and associate Elina Khodorkovsky are providing tax advice. Members of the Davis Polk team are based in the New York and Northern California offices.