Coal company whose workers protested over unpaid wages gets $2.7 million relief loan

In January, for the second time in less than a year, a group of Kentucky coal miners who were fed up with a company that failed to pay them for past work gathered on a set of railroad tracks and dug in for the long haul.

Unlike a similar protest the previous summer, which lasted months, the January railroad blockade worked more quickly. The company paid the miners three days into their protest, and they dispersed, leaving the train free to rumble through the tiny Pike County community where they had blocked its path.

But controversy around American Resources Corporation continued, including that it failed to pay employees in Perry County for past work; accumulated a long list of environmental violations that it has yet to repair; and that it remains barred from acquiring new permits from the federal government.

Despite that, ARC was one of several publicly-traded companies to receive a multi-million dollar loan from the Paycheck Protection Program.

According to the company’s SEC filings, it received a $2.7 million loan on April 22 through the program, which aimed primarily to help small businesses survive the downturn caused by the spread of novel coronavirus.

The company is one of many publicly-traded corporations to cash in on the program.

Many of those companies were criticized for taking the loans, and some returned the money after scrutiny from the public and the U.S. Department of the Treasury, which issued guidelines for large corporations to return the loans by May 14.

According to those guidelines, “it is unlikely that a public company with substantial market value and access to capital markets” could qualify for a PPP loan in good faith.

ARC, which is based in Florida, has two operational mines in Kentucky and several that are inactive, according to a recent company report.

Several of the company’s employees told the Herald-Leader in January that ARC regularly paid workers late. In Perry County, several employees reported going weeks without a paycheck.

Its purchase of the Perry County mining complex, which it acquired last year during the bankruptcy of Cambrian Coal, was also criticized because ARC was blocked from acquiring new mining permits by federal regulators.

According to court records filed this week in the U.S. Bankruptcy Court for the Eastern District of Kentucky, Kentucky regulators claim ARC has taken “little to no action” to fix its environmental violations.

The filing lists 65 outstanding violations from ARC entities dating as far back as 2017 — 61 violations in Kentucky and four in Indiana — which prevent it from acquiring new permits to mine coal.

In January, multiple attorneys and coal industry officials told the Herald-Leader that a “permit block” almost always prevents a company from buying coal mines that are auctioned off during bankruptcy.

Still, ARC was allowed to buy coal mines in Kentucky during the bankruptcy of Cambrian Coal last year.

Workers began to get lay-off notices shortly afterward, their workers’ compensation insurance lapsed, and conditions generally deteriorated, according to several former employees.

Then, paychecks stopped coming altogether. Miners in Pike County took to the railroad tracks and workers in Perry County felt taken advantage of.

The company eventually made good on all its late paychecks, but the Perry County complex shut down and hasn’t opened since.

According to a company report, ARC is “working with regulators to approve its revised mine plans” in Perry County and, once approved, will be well-positioned to resume operations.

The company did not respond to a request for comment for this story.

ARC did not include any information in its SEC filings about how it will spend the $2.7 million PPP loan. Companies are encouraged to spend the money on payroll. Those that spend at least 75 percent on payroll and don’t cut salaries or lay off employees will be forgiven by the federal government.

Several small businesses across Kentucky have said it’s been difficult for them to get approval.

Kristi Kendall, the owner of Kickin’ Ash, a vape store in Prestonsburg, said she tried to apply for a PPP loan last month through U.S. Bank, but said the bank repeatedly delayed her application process.

Kendall said she knew several business owners in Louisville and other parts of Kentucky who had larger businesses and got through without much trouble.

Before Kendall could even apply with U.S. Bank, the fund had run out of money during its first round.

“I was enraged, I was so mad,” Kendall said. “It was all starting to feel really hopeless.”

To pay bills and continue paying her employees, Kendall said she lived off her stimulus check and stopped paying her own regular salary through her business.

Kendall said she did get approved for a PPP loan this week with a smaller, local bank. She also received a grant from the Floyd County Community Foundation, which has provided grants to several other small businesses in the county.

“That’s how it’s been for people here — we don’t get approved unless we use a local bank,” Kendall said. “It seems like the local banks are really fighting for small businesses, and these big banks like U.S. Bank, they’re bull---.”

ARC, which is valued at more than $24 million, received its loan through Merchants Bank of Indiana. Its stock price has rebounded in recent months to 90 cents a share, after hitting an all-time low in February of 44 cents a share.

In February 2019, its stock was worth more than $11 a share, but plummeted to less than a dollar by September of that year and has rarely risen above $1 since.

Rhino Resource Partners and Ramaco Resources, two coal companies based in Lexington, also got multi-million dollar relief loans while several small businesses have struggled to find the same support.

The Treasury Department said in its guidelines that it will audit all loans over $2 million.

This story was originally published May 8, 2020 at 12:19 PM.