1995-10-03_GENERAL DOCUMENTS - C1981017

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Cheryl A. Linden October 3 , 1995 Page 2 In addition, MCR continues to liquidate its mining equipment through a sales program begun during MCR' s bankruptcy. However, the results of the equipment liquidation program have been disappointing. We thus anticipate that the funds to complete reclamation of MCR' s property necessarily must come from the USFS land exchanges and from the sale of the Preparation Plant Tract, the Unit Train Loadout, and the Coke Oven Tract . The Coke Oven Tract is not contained in the DMG-permitted area, and it is our understanding that there are no reclamation requirements regarding this tract . The Unit Train Loadout is essentially reclaimed, subject to the removal of a few structures and a little revegetation. The focus of reclamation thus is the Preparation Plant Tract . Of the three parcels, MCR anticipates that the Preparation Plant Tract is the most valuable . However, there is an obvious chicken-and-egg problem regarding this parcel . Purchasers are unlikely to purchase the parcel until reclamation is completed, for fear that funds needed to complete reclamation will not become available . However, a substantial portion of the funds necessary to complete reclamation will not become available until the parcel is sold. MCR has been looking for ways to resolve this dilemma. You may recall that at our August 29 meeting, we discussed the possibility that Redstone Corporation, an affiliate of MCR, might offer to purchase MCR' s remaining real property, excepting the USFS exchange parcels; the purchase price would be used to complete the remaining distributions under the Bankruptcy Plan. The proposal outlined below is different than the proposal discussed at the August 29 meeting, although it achieves the same result . Completing Plan Distributions to DMG Through New Loan The new proposal is based on Section 6 . 7 of the Bankruptcy Plan, which provides : If any person advances funds to the Debtor or the Creditors' Trust , which funds are used to make any distribution provided under the Plan, the person advancing such funds shall become subrogated to the position of the class or classes of creditors receiving such funds, to the extent of funds advanced, after all distributions to such class or classes have been completed.