Cambrian Coal files bankruptcy, looks to sell substantially all assets

By Caroline Salls

Pittsburgh, June 18 – Cambrian Coal LLC filed Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the Eastern District of Kentucky to market and sell substantially all of its assets.

J. Mark Campbell, the president of debtor Cambrian Holding Co., Inc., said in a statement filed with the court that, in connection with a TECO acquisition, the Cambrian Coal debtors undertook a significant capital raising effort to place cash back on their balance sheet to provide liquidity.

However, Campbell said “the debtors’ attempts to raise liquidity were hampered by a significant downturn in the market.” As a result, the debtors were unable to meet their working capital requirements, leading to liquidity challenges.

In early June, “with cash at a minimum and no further opportunities to enhance liquidity,” Campbell said Richmond Hill Capital Partners, LP agreed to provide emergency financing to fund professional fees and working capital needs necessary to enable the debtors to prepare for a Chapter 11 filing.

“After an extensive and deliberate process, the debtors have determined in their business judgment that the commencement of these Chapter 11 cases is the best course to preserve and maximize liquidity and value for their stakeholders,” Campbell said in the statement.

In conjunction with the bankruptcy filing, the company obtained a commitment for $15 million in debtor-in-possession financing.

Richmond Hill Capital Partners and Essex Equity Joint Investment Vehicle, LLC are the DIP financing lenders. Richmond Hill Capital Partners will serve as administrative agent.

The facility will mature on the earliest of the effective date of a confirmed plan, six months after the bankruptcy filing date, the date of acceleration of the loans, the date of the closing of a sale of all or substantially all of the company’s assets and the date on which the court approves the extension of any other credit facilities over the objection of the DIP lenders.

Interest will accrue at a rate of 12%, with 50% to be paid in cash and 50% in kind.

A total of $12 million of the financing will be available on an interim basis.

According to court documents, Cambrian Coal has $10 million to $50 million in assets and $300 million in debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Frost Brown Todd LLC, Whiteford, Taylor & Preston, LLP and McGuire Woods LLP are representing Cambrian Coal in the Chapter 11 proceedings.

Cambrian is a Belcher, Ky.-based coal company. The Chapter 11 case number is 19-51200.

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