Davis Polk advised an ad hoc group of secured noteholders and the DIP facility agent in connection with the restructuring of Cloud Peak Energy Inc. and certain of its affiliates and with the sale of substantially all of its operating assets to Navajo Transitional Energy Company (“NTEC”) pursuant to section 363 of the U.S. Bankruptcy Code. Through the NTEC sale, Cloud Peak sold substantially all of its assets in exchange for among other things, $15.7 million of cash, $40 million in unsecured promissory notes, a five-year term production royalty interest and the assumption of certain tax liabilities and coal royalty payments in the amount of approximately $87.5 million, and the assumption of all environmental reclamation obligations. Members of the ad hoc group also provided Cloud Peak’s debtor-in-possession credit facility composed of a $35 million new money tranche and a $28 million roll-up tranche that had been backstopped by members of the ad hoc group, which was fully repaid in connection with the NTEC sale.

On December 5, 2019, Cloud Peak’s plan of reorganization was confirmed by the United States Bankruptcy Court for the District of Delaware. Under the plan, the ad hoc group and other holders of Cloud Peak’s secured notes will receive reinstated notes in the amount of $60 million, the NTEC notes in the amount of $40 million, equity in reorganized Cloud Peak holding the consideration from the NTEC sale, and a cash distribution on account of prepetition security interests. Cloud Peak emerged from chapter 11 on December 17, 2019.

Headquartered in Gillette, Wyoming, Cloud Peak Energy mines low sulfur, subbituminous coal, and provides logistics supply services as a sustainable fuel supplier for approximately 2% of the nation’s electricity.

NTEC is a wholly owned limited liability company of the Navajo Nation operating in the coal and sustainable energy industry with operations in Farmington, New Mexico and on the Navajo Nation reservation.

The Davis Polk restructuring team included partner Damian S. Schaible, counsel Christian Fischer and associates Aryeh Ethan Falk and Samuel A. Wagreich. The corporate team included partner William L. Taylor and associate Camila Panama. The finance team included partner Monica Holland and associate Sarah S. Hylton. The capital markets team included partner Nicholas A. Kronfeld and associate Sana Bargach. The tax team included partner Lucy W. Farr, counsel Leslie J. Altus and associate Rebecca A. Rosen. All members of the Davis Polk team are based in the New York office.

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