By Heather Richards

May 24, 2018 - The Appalachian firm that recently acquired two Wyoming coal mines argued in court documents that it defaulted on its debt because the bank didn’t answer the phone.

First Third Bank of Ohio sued Revelation Energy in the U.S. District Court for the Southern District of West Virginia earlier this year for failing to make payments on a $20 million loan and a $5 million loan during the transfer of Eagle Butte and Belle Ayr mines from Contura Energy to Revelation’s affiliate Blackjewel.

In four previous deals with the coal company, First Third had agreed not to exercise its right to collect the debts owed if Revelation followed a number of guidelines, including not transferring any assets that could be considered as collateral. The Wyoming deal violated that contract, the bank argued in court recently.

Revelation and Blackjewel acquired the Wyoming mines in 2017 without paying Contura any cash. The Appalachian coal firm picked up the “crown jewel” assets of the Powder River Basin — owned by Alpha Natural Resources during brighter days for the coal industry — by assuming the mines’ reclamation costs. Contura also paid Revelation $21 million for anticipated taxes due in Wyoming.

Revelation responded to the bank’s allegation in a Monday filing.

On four previous occasions, First Third had been responsive to Revelation’s attempts to avoid default and made arrangements to that effect. But in late 2017, the bank stopped answering the phone, Revelation alleges.

The coal company made the assumption that the bank would continue to refrain from declaring Revelation in default.

“But for First Third’s refusal to communicate with Revelation, there never would have been a missed payment,” the company argues. “The situation where one party is engaged and suddenly not engaged raises questions as to the purpose behind the lack of communication.”

The coal company pleaded leniency from the court, given that it had paid nearly $20 million of the loan back despite the bankruptcies and financial pressures roiling the coal industry.

Revelation also disputed the claim that the Eagle Butte and Belle Ayr mines were collateral that would have secured the loans to First Third. The company has filed a counter suit, accusing the bank of fraud in order to collect money.

Blackjewel is a newcomer to the Powder River Basin. The sale of once-highly valuable mines to an unknown company for next to no cash surprised a number of people in Wyoming. 

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