Mine president John Baugues Jr. denied the allegation, saying Tuesday that the lawsuit appeared to be an effort to apply pressure for a quick repayment of the loan.
The Webb Financial Group Inc., Franklin Asset Exchange LLC and Disciples Limited LLC filed suit in U.S. District Court in Billings on Friday. The groups represent about 350 investors, according to Atlanta securities attorney Gregory Bartko, who represents the lenders.
"There's a grace period in the contract that they don't refer to," Baugues said.
The Bull Mountain coal development project, which was announced in 2001, is a coal mine with adjacent twin 390-megawatt power plants being built near Roundup. The underground coal mine has been producing coal since early 2004. Other work on the project continues.
Baugues, general counsel Joe Gerbase and John DeMichiei, president and chief executive of Bull Mountain Coal Mining Inc., which is the new corporate name, said they hadn't seen the lawsuit because they hadn't been served.
On Tuesday, Bartko said he had talked with New York attorney Stan Lane, who represents both Bull Mountain and Airlie, the firm that owns 75 percent of the Bull Mountain coal projects, and that Lane agreed to be served with the lawsuit.
The settlement language signed May 23 allows a 90-day extension of the debt under two conditions, Bartko said.
The first condition is that the borrowers sign a legal document that says a judgment can be filed in court without a lawsuit. Discussions on this point occurred, Bartko said, but broke off on Dec. 8, a week before he filed the lawsuit.
The second condition was that Bull Mountain developers would try to find a buyer.
"We've asked them three times in writing to tell us what efforts they've made to sell the property," Bartko said. "They never bothered to respond."
Baugues said he owns 25 percent of the Bull Mountain venture, with Airlie holding the other 75 percent. One of the Airlie companies, the Airlie Opportunity Capital Management L.P., "manages hedge funds that invest in stressed and distressed high-yield debt markets," according to Forbes magazine.
Airlie, which bought into the Montana coal mine assets on Sept. 9, 2005, has invested heavily in Montana, Baugues said.
"We've been trying to raise money for years out here," he said. "Airlie has spent $110 million out here. These people are good people."
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