US-based Arch Coal has reached a self-bonding deal with Wyoming regulators that would cover 19% of the company’s $485m reclamation bill.
The deal will provide the bankrupt company with temporary relief from liability for huge amounts in cleanup costs for coal mines in the future.
Arch Coal previously utilised self-bonds in order to cover the costs of clean mines by using its balance sheet as a guarantee.
Following the company’s filing of voluntary petitions for reorganisation in the US Bankruptcy Court, this traditional practice attracted scrutiny from federal regulators.
The practice left the company spending huge amounts to cleanup its mines.
Wyoming and the Wyoming Department of Environmental Quality (WDEQ) are believed to have expressed their consent to accept $75m from a debtor-in-possession (DIP) financing carve-out in the bankruptcy, Reuters reported Arch Coal stating in filing with Missouri bankruptcy court.
The company can use this amount to clean its mines including Black Thunder, Coal Creek and Vanguard.
In addition, $17m will also be provided for four smaller mines.
Under the settlement terms, Arch Coal is required to submit new bonds for the remaining amount once it comes out of bankruptcy.
The deal still requires approval from a federal bankruptcy judge.