Laserfiche WebLink
_-- _----- _._,. ~ .-_~~urt,_5 L!D PAGE D3 <br />Mr. David A. Berry <br />December 28, 2000 <br />Page 2 <br />The Violations Alleged in the NOVs Pull Require 60 Days to Abate. <br />As we have previously discussed with you and others from the Division of Minerals and <br />Geology ("the Division"), Bowie's pazent company, AEI Resources, Inc. ("AEl"), has reclamation <br />bonds and other bonds from Frontier Insurance Company ("Frontier") totaling more than <br />$680,000,000, The Frontier bonds for the Bowie operations total approAmately $11,500,000. AEI <br />cannot selectively replace the bonds for the Bowie operations in Colorado without triggering siun7ar <br />demands from regulatory agencies in other states. <br />Therefore, as a practical matter, AEI must replace all $680,000,000 worth ofFrontier bonds <br />in order to replace the bonds applicable to the Bowie operations. This cannot be done within the <br />current abatement period because AEI does not have the financial balance sheet to meet the cutrem <br />demands of the surety industry for bonding obligations of this magtritude. <br />in this regard, AEI has been working diligemly for the past six months to wm~letely <br />restructure its financial arrangements nationwide, in order to free the credit necessaryto replace aD of <br />its Frontier bonds. Within the next 60 days, AEI and Bowie are confident that one of the following <br />events can occur: <br />(a) AEI's lenders will substantially exchange all of AEI's debt for equity and new debt, <br />thereby freeittg AET's credit for use in acquiring new bonds; or <br />(b) Bowie will be sold to new owners, who will have the credit available to acquire new <br />bonds, and who have indicated that they possess a commitment for bonding from an <br />acceptable surety. <br />AEI and Bowie aze proceeding with both options simultaneously, on parallel tracks, and we <br />are confident that one or the other can be completed within the next 60 days. However, neither <br />option can be completed within the current abatement period. <br />2. A 60-Dav Extension of the Abatement Period Will Not Harm the State of Colorado. <br />Acknowledging thaz we have been working on this issue since June, the Board's regulations <br />allow an NO V abatement period of up to 90 days. However, the NOVs have set an abatemem period <br />of just 19 days, most of it during the holiday season when little can be accomplished toward a <br />resolution ofthe financial issues surrounding replacement ofthe bonds. Bowie's requested extension <br />of 60 days brings the total abatement period to only 79 days, well within the 90-day period atrthorized <br />by the regulations. 1 respectfully submit that granting Bowie the additional 60 days will not harm the <br />State of Colorado, for the following reasons: <br />D0313672.1 <br />