Investors ask court to allow mine foreclosure

By JAN FALSTAD
Billings Gazette


BILLINGS, Mont.-- Three East Coast companies representing more than 350 investors who put money into the Bull Mountain coal mine have asked a federal court in Billings to allow them to foreclose on the mine and collect nearly $20 million.

On Thursday, Alan Bryan of the Crowley Law Firm filed a motion asking the U.S. District Court in Billings to grant his clients a partial summary judgment. That means the plaintiffs and defendants agree on the key material facts and the dispute is a matter of law only.

"A judgment should be entered in our favor. Foreclosure should be entered," Bryan said. "We should be able to go forward and liquidate the property."

Last December, three companies representing these investors - Webb Financial Group Inc., Franklin Asset Exchange LLC and Disciples Limited LLC - brought a federal lawsuit in Billings claiming that Bull Mountain Coal Properties Inc. and its successors had defaulted on paying back the loans and interest now totaling nearly $20 million.

The lawsuit claims Bull Mountain mine developer John Baugues Jr., his former partner, George Parthemos, of New York City, and their companies borrowed the money through bond sales from 2001 to 2005. The investors purchased 12-month notes paying a hefty interest rate of 12 percent to 15 percent.

A private equity group in Greenwich, Conn., operating under the name Airlie Opportunity Fund Cayman LTD, bought a 75 percent interest in the mine in September 2005 and assumed this debt. Baugues retains 25 percent ownership.

Airlie is trying to sell its $110 million interest and Baugues is trying to work out a deal to buy back the company. He said the mine could produce 11 million tons of coal a year if a long-wall miner is purchased and installed and a short-line railroad built.

On Feb. 27, the mine near Roundup shut down operations and laid off 50 workers. Only 12 employees remain on the payroll at the mine and at the corporate office in Billings.

The claim that both sides agree on the facts isn't the way the Bull Mountain officials see things.

Harlan Krogh, an attorney with Moulton, Bellingham, Longo & Mather of Billings, which represents Bull Mountain Resources Inc., has questioned the validity of the original judgment in District Court in North Carolina, which ruled that the mine owners had defaulted.

Krogh did not immediately return calls for comment Friday.

In addition to the North Carolina judgment and this federal action, there are two lawsuits filed in District Court in Roundup and Billings. Two lawsuits were brought because the mine crosses over the Musselshell/Yellowstone County border.

Gov. Brian Schweitzer has talked of using the vast coal reserves around the mine 16 miles south of Roundup to fuel a proposed $1.5 billion to $2 billion coal-to-liquids project. That project is in the study phase now.

Bryan argued that with the mine shut down and no income coming in from coal production, the lenders have even more reason to go after the mine's hard assets.

"They're looking to sell it," Bryan said. "Unless new investors are interested in shoring up this debt, we're right back to where we started."

Contact Jan Falstad at jfalstadbillingsgazette.com or 657-1306.

Article Source http://www.jacksonholestartrib.com/articles/2007/03/17/news/wyoming/1c7c9d2daf0866a9872572a1000577f4.txt