Phoenix Coal was a complex bond release and reclamation project that involved a Western Kentucky coal mining operation owned by a Canadian company.
Phoenix Coal had mined in Muhlenberg, Crittenden and Hopkins Counties in Western Kentucky. Due to market conditions, the had company idled all operations in the state. While Phoenix was aware of pending reclamation obligations, it had yet to begin reclamation activities and was in danger of forfeiting the surety bonds ($2,600,000). The company also was facing fines and penalties of several hundred thousand dollars accessed to the individual owners, or in this case, the company’s directors.
The Kentucky Department of Natural Resources (KYDNR) believed that the sites could not reclaimed for the bond amount, and the state was looking to the company to either reclaim the sites or forfeit the bonds. In that latter case, the DNR could pursue director’s for additional fines and penalties.
The directors of Phoenix Coal Company were understandably concerned. They contacted an attorney in Lexington, Kentucky to discuss options. The attorney advised the directors to contact NewBridge.
NewBridge came on board and used its contacts at the KYDNR to ascertain the reclamation status of each site. Based on NewBridge’s breadth of industry experience, inclusive of construction, the company formulated a plan to deal with reclamation obligations and relieve Phoenix shareholders and directors of all liability while reclaiming the sites to the high standards of the KYDNR.
The DNR estimated that reclamation would cost $6 million to $7 million. NewBridge’s plan called for $5.6 million, which was considerably more than the $2.6 million bond amount. NewBridge advised Phoenix that the DNR would only sign an agreed order to release the firm from its obligation if Phoenix turned over the $2.6 million in collateral on the surety bonds and provide an additional $3 million. The company’s directors agreed and thus were able to walk away from the problems saving Phoenix millions of dollars in the process.
NewBridge expected to spend two years completing the project. Instead, it took the company just 19 months. All sites were ranked by priority based on potential environmental damage. Though each site was unique and presented problems specific to the site, NewBridge met every deadline and completed the work ahead of schedule.
All told, NewBridge moved 750,000 yards of rock and dirt, spread 20,000 tons of lime, planted 337,000 trees, revegetated 1,000 acres of highly acidic soil, and eliminated or reconstructed 10 ponds.