The Fayette Tribune, Oak Hill, W.Va.

Local News

March 11, 2013

Frasure Creek parent company forced into bankruptcy

Frasure Creek’s parent company, Trinity Coal, says it is “in desperate need of cash” to continue its mining and surface mine reclamation. Without an infusion, officials say the company will be forced to terminate operations.

Several of Trinity’s big lenders — ING Capital, Natixis and Credit Agricole — say they are owed a total of over $103 million by the company.

But as of March 4, the company had only $700,000, of which $480,000 was reserved for last Friday’s payroll.

Trinity is a subsidiary of India-based Essar Minerals, which acquired the company in 2010.

The company currently employs approximately 160 people at its only active operation, the Deep Water complex in Fayette County. The company has inactive operations in Kentucky and in West Virginia in Boone, Mingo, McDowell and Wyoming counties.

Other companies that have supplied Frasure Creek with goods and services — such as Walker Machinery, Whayne Supply and Austin Powder Co. — are claiming over $20 million more in unpaid bills.

These companies filed an involuntary petition in court Feb. 14 to force Frasure Creek into Chapter 11 reorganization bankruptcy. The petition was later lumped in with other proceedings against Trinity by lenders.

Tuesday, the U.S. Bankruptcy Court of the Eastern District of Kentucky heard from creditors, the West Virginia Department of Environmental Protection, Trinity and others. Judge Tracey N. Wise is presiding over the case.

With no opposition from Trinity, the judge granted the relief sought by creditors, meaning the Chapter 11 bankruptcy will go forward. Chapter 11 bankruptcy allows a company to stay in business, but follow a reorganization plan so that creditors can be paid from cash flow.

The Page-Kincaid Public Service District (PSD), which operates two deep wells just below one of Frasure Creek’s permitted surface mines, signed on to the case “as a precaution.”

John David, a board member of the PSD, urged the Fayette County Commission to do the same if any past, present or future taxes are owed to the county.

Credit Agricole makes accusations in court documents about Trinity’s “gross mismanagement,” continuous corporate turnover and acute financial decline since 2011.

It says Trinity’s accounts payable have grown by $10 million in just over a year to nearly $32 million and that its failure to resolve these debts has put the company at risk of losing certain heavy equipment necessary to continue mining and reclamation activities.

The company’s entire executive team resigned in mid-2011. Its general counsel, Jonathan Levy, did the same in January, sending an e-mail in the process that stated, “I honestly believe the whole thing [Trinity] is going to collapse,” according to court documents.

The lender also says that there are approximately 50 lawsuits pending against Trinity.

Credit Agricole and ING have secured commitments for $15 million in post-petition financing for Trinity’s liquidation.

The company says several factors in recent years have led to its decline. First, it notes a decline in demand due to cheaper energy in the form of natural gas and nuclear. It also says the domestic coal market is highly competitive. Coupled with a weak economy and the availability of cheaper fuel, this spells trouble for most coal producers in the region.

To deal with the situation, Trinity says it has downsized staff, reduced mining operations and sold equipment.

But apparently that hasn’t been enough.

The company admits it has not generally been paying what it owes to creditors and contractors who have provided them with goods and services.

The company consented to an order of relief from the court

David Stetson has been appointed as the permanent trustee for Frasure Creek during its reorganization.

He had served last year as Trinity’s Chief of Restructuring during a time when rumors about an impending bankruptcy were floating through the community.

The company ceased production in August 2012, which Stetson said was due to an interruption in its supply agreement.

Frasure Creek’s Deep Water complex in the Page-Kincaid area of Fayette County consists of one surface mine and two highwall mines; a company-controlled prep plant and transportation infrastructure. It also operates another prep plant owned by another company.

The company holds many more surface mine permits in the area and was taken to task by area residents when it expanded its operations. The citizens fought, but ultimately failed, to appeal one surface mine permit they felt could damage the drinking water supply.

According to the Office of Surface Mining, Trinity previously filed for Chapter 7 voluntary bankruptcy in October 2005 and closed that process in January 2006.

A further hearing on the current Chapter 11 proceedings is set for April 2 in Kentucky. The company is being given until April 15 to file schedules and statements of its financial affairs.

— E-mail: cmoore@register-herald.com

 

1
Text Only
Local News
  • ee 1.jpg Energy Express makes impact on students’ lives

    Energy Express to him, Matt White says, is all about a “different experience.”

    July 24, 2014 2 Photos

  • maurices Fostering Self-Esteem

    The local Maurices is involved in a project aimed at making the school transition a little easier this fall for foster children in the area.

    July 21, 2014 1 Photo

  • Children’s Health and Safety Fair scheduled for August 1

    Montgomery General Hospital and Dr. Traci Acklin have announced that the 2014 Children’s Health and Safety Fair will be held on Friday, Aug. 1 from 10 a.m. to 2 p.m. at the hospital.

    July 21, 2014

  • Theater to hold auditions

    Open auditions are set for Tuesday and Thursday at the Historic Fayette Theater for the comedy/drama “Belongings”. Auditions will be held at the theater in Fayetteville at 7 p.m. each evening.

    July 21, 2014

  • asb carver 25 years and counting

    July 18, 2014 1 Photo

  • Taylor Made Free concert series

    The next free public concert in the Lively Family Amphitheater Summer Concert Series is a performance Saturday at 6 p.m. by popular band Taylor Made.

    July 17, 2014 1 Photo

  • Energy Express open house set

    Energy Express, an award-winning summer reading program serving 35+ children in Fayette County, will host a free open house for members of the Beards Fork SALS community. The event takes place on Thursday, July 24, at 10 a.m. to 12 p.m.

    July 17, 2014

  • rhody1.jpg Stages of life

    July 14, 2014 3 Photos

  • thurmond depot.jpg Explore town’s rail heritage

    Discover what life was like in one of the New River Gorge’s most renowned towns as you join National Park Service rangers and Operation Lifesaver on Saturday, July 19 from 10 a.m. to 2 p.m. to explore the historic railroad town of Thurmond.

    July 14, 2014 1 Photo

  • apt bldg1.jpg Demolition and disposal

    July 10, 2014 3 Photos