In February, Alpha announced that it would sell its most profitable operations, principally located in Wyoming, to its secured creditors led by Citicorp North America and a group of hedge funds. The sale includes one small underground mining operation in Nicholas County, West Virginia. That sale had the potential to leave all but one of Alpha’s West Virginia mining sites with insufficient funds with which to bond or reclaim and treat water at those legacy sites.

DEP Cabinet Secretary Randy C. Huffman said: “Following discussions with DEP officials, Alpha and its secured creditors have stepped up and provided significant funding to provide for bonding and reclamation at those sites.

“Another company might have just walked away, leaving hundreds of millions of dollars of reclamation and water treatment obligations to the state’s Special Reclamation Fund. DEP’s actions over the past four years have ensured that significant additional funding will be provided for reclamation, well over and above the amount of Alpha’s mining bonds.”

DEP objected to approval of the sale in filings with the Virginia bankruptcy court and started wide-ranging discovery of Alpha and its secured hedge fund creditors. This agreement in principle resolves DEP’s objection to the sale and to Alpha’s subsequently proposed bankruptcy plan.

Under the agreement, the surety bonds Alpha posted to obtain its mining permits will remain fully in place. But Alpha, West Virginia’s last remaining self-bonded coal company, will post an additional $100 million in penal bonds with respect to its active and inactive mining sites in West Virginia.

In addition, Alpha will post $39 million in letters of credit or cash bonds as additional financial assurance for the performance of Alpha’s reclamation and water treatment obligations at its other remaining sites in West Virginia.

Alpha has agreed to post penal bonds for, and reclaim and treat water at all its remaining mining sites, including the sites at which it has ceased mining operations. The company and its secured creditors have committed to provide additional funding totaling approximately $209 million.

In addition to providing for the reclamation of Alpha’s sites, the agreement allows for the continued operation of various mining sites in West Virginia. Profits from the operation of those sites are expected to support reclamation and water treatment efforts.

DEP Division of Mining and Reclamation director Harold D. Ward said noted that Alpha’s active and inactive sites hold important metallurgical coal reserves.

“The met coal sector has seen early signs of improvement,” Ward said. “If the met coal market becomes more vibrant, Alpha will be well-positioned to restart or increase production at those sites and sell some of the world’s best met coal out of mines in West Virginia. That would benefit all West Virginians as well as ensure a steady flow of money for environmental cleanup.”

Subject to market conditions, Alpha will continue to employ its workforce both in its ongoing operations and in performing its reclamation operations.