Landree, which has produced thermal coal from the No. 4 seam sporadically this year after opening in early 2013, was idled on September 15 in the run-up to the bankruptcy filing in the U.S. District Court for the Southern District of Indiana. A continuous miner operation and Lily’s primary asset, Landree most likely will be sold during the bankruptcy process, according to David Krebs, an Indianapolis attorney who represents the company.
Krebs indicated there was some early buyer interest in Landree, but said Lily was not close to reaching a deal. He did not rule out the possibility that Lily, founded several years ago by Richard Risinger, also could seek to reorganize and continue operating the mine itself.
In the weeks after the filing, one of the unanswered questions concerned the disposition of Lily’s coal supply agreement with Indianapolis Power & Light Co., a subsidiary of global power producer AES Corp. of Arlington, Va. The contract calls for Lily to deliver 400,000 tons of coal to IP&L over the next couple of years.
Krebs said every effort will be made to retain the contract on behalf of Lily or a successor company, and that Lily was in negotiations with IP&L in early October. A spokeswoman for the utility said it was too soon to say what might happen to the contract.
Lily had railed only a small amount of coal from Landree to the utility before the mine was idled and there was no additional stockpiled coal left at the mine. Landree had produced only about 17,000 tons of coal through the first half of 2013, federal Mine Safety and Health Administration records show.
Although it was not producing coal, Landree remained in operation and a dozen or so employees were pumping out water and performing other activities to maintain the mine for an eventual reopening by a new owner or Lily. To that end, Lily secured an approximately $125,000 loan from Platinum Partners Credit of New York, a primary secured creditor.
Efforts also were being made to line up $2.5 million in debtor-in-possession financing from Reich Brothers LLC of Los Angeles, Calif., Krebs said.
The Platinum Partners funding was expected to be sufficient to keep Landree in operation at least through October. Among Lily’s sources of funds was $110,000 in anticipated revenue from an IP&L coal shipment, court records showed, as well as $218,000 in accounts receivable from the utility that arrived on September 26.
Lily’s projected budget through October 31 included $120,000 for employee salaries, $75,000 for health insurance, $30,000 for legal counsel retainer and $20,000 for utility expenses.
VHGI, in an October 1 filing with the Securities and Exchange Commission, blamed the bankruptcy filing on “the failure of Hassan Alshaban Principal and Al Rami PureAl Rami Pure LLC to perform under the terms of the agreed upon renegotiated terms of the equity investment agreement.” The apparent investors in the company could not be reached for comment.
