The twice-delayed auction for the assets of bankrupt Patriot Coal has attracted another potential bidder, according to the company’s attorney, who told the bankruptcy court that it hopes to have a second qualified bid by this Friday’s deadline. The lead bidder, Blackhawk Mining, has offered to swap Patriot’s funded debt of $791 million with new debt valued at $643 million plus 30% of the company that emerges from the bankruptcy buyout.

Patriot Coal’s attorney did not name the potential competitive bidder, nor did he specify the terms being discussed other than to say that they are “substantially similar” to the Blackhawk deal, according to The Wall Street Journal. If the bid or some other is received by the deadline, an auction will be conducted Monday, September 21.

Patriot already has found a buyer for the assets that Blackhawk does not plan to acquire. The Virginia Conservation Legacy Fund (VCLF) has offered to assume $400 million in Patriot Coal’s liabilities and commit $109 million for pension and health benefit obligations. The VCLF bid includes no cash to Patriot, but does include a pledge to issue new equity to Patriot’s creditors.

The conservation fund will be in the odd position of operating two West Virginia coal mines and controlling 153 additional mining permits. The VCLF will form a new affiliate and commit $109 million for pension and health benefit obligations and assume $400 million in liabilities. One of the mines would be closed and the other will continue producing coal. By planting trees to offset the carbon emissions from burning coal, the VCLF will be able to bundle its coal along with renewable energy credits and sell the package at a profit to coal-burning utilities.

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