Lighthouse Resources Inc. is planning a quick sale of Millennium Bulk Terminals-Longview LLC, a halted project that was long viewed by the coal sector as key to unlocking Asian markets to U.S. producers facing a secular decline in domestic demand.
After filing for a bankruptcy reorganization Dec. 3, the company has asked the U.S. Bankruptcy Court for the District of Delaware to allow a sale "as expeditiously as possible" due to high carrying costs and a lack of debtor-in-possession financing to proceed through its bankruptcy restructuring. The company said its available cash and collateral would only last through March 2021.
Lighthouse wrote that it will withdraw its motion on bidding procedures, reject leases tied to Millennium and seek to dismiss the case or convert it to a Chapter 7 bankruptcy liquidation unless it has a stalking horse bid by Dec. 16 due to its cash constraints.
The company's proposed bidding procedures contemplate a Dec. 30 bid deadline and an auction in Lexington, Ky., on Jan. 4, 2021, if necessary.
Lighthouse owns improvements, leases land and operates a 540-acre zoned heavy industrial site connected to an aquatic lease allowing three docks on the Columbia River in Longview, Wash. The company also holds an exclusive right to develop a business that would serve as a coal export terminal for its own Decker mine in Montana and other coal companies.
The company intended to build a port that would have an export capacity of up to 44 million tons of coal per year, according to its website.
Lighthouse has faced numerous regulatory and legal obstacles in its attempt to build out its coal export facility in Washington, including state officials denying a critical water permit.
In October, the U.S. Supreme Court invited the acting solicitor general to file a brief to express the federal government's position on a case filed by Wyoming and Montana, which alleged that Washington violated the U.S. Constitution's commerce clause by blocking the coal export terminal. In 2019, Washington Commissioner of Public Lands Hilary Franz pointed to concerns about Millennium's financial condition.
According to the Dec. 9 court filing, Lighthouse began marketing Millennium and associated assets before filing its bankruptcy petition. The company said it received a term sheet from a potential buyer proposing to purchase some or all of its Millennium assets, but it did not identify the party and noted that discussions continue with several potential purchasers.
According to U.S. Mine Safety and Health Administration data, Lighthouse's Decker mine produced 3.6 million tons of coal in 2019. The company has said it would consider selling the Decker mine. It also laid out a restructuring plan that included establishing a trust to create a mine reclamation plan.