Westmoreland Coal Co. announced Tuesday it will file for Chapter 11 bankruptcy protection.
In a press release, the Denver-based company that owns the Rosebud Mine at Colstrip said it has entered into a restructuring support agreement with a committee representing its lenders that includes the filing Tuesday of “voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.”
Similar bankruptcy protection action will be filed by Westmoreland affiliate Westmoreland Resource Partners, LP, the company stated in the press release.
The company “has agreed to terms with its secured creditors on the use of cash collateral to fund WMLP’s normal course operations and allow WMLP to serve its customers during the course of WMLP’s chapter 11 case,” the release states.
Westmoreland Interim Chief Executive Officer Michael Hutchinson described the move as coming after “months of thoughtful and productive conversations with our creditors.”
“We will continue to work constructively with the Ad Hoc Group and serve our customers in the normal course as we progress through an expedited process to restructure our long-term debt and other liabilities,” he said in the release. “Our goal is to emerge as a stronger Westmoreland, better positioned to grow and thrive. We appreciate the ongoing support of our business partners, customers and creditors throughout this process. In addition, we thank our passionate Westmoreland team members for their tireless dedication and commitment to building a stronger Westmoreland.”
Last week, the company announced it had obtained a loan payment extension through Monday.
The ailing coal firm filed notice Thursday with the Securities and Exchange Commission that its lenders agreed to give the company another extension on its loan payment. The loan had been due Friday.
Thursday’s filing with the SEC gave Westmoreland unti Monday to work out a new restructuring agreement with first lienholders and noteholders.
It was the latest in a series of extensions Westmoreland received this year as it tried to restructure its debt.
In addition to the Rosebud Mine at Colstrip, Westmoreland is also a partner in the Absaloka Mine near Hardin and owns the Savage Mine located along the Montana/North Dakota border.
In 2016, Westmoreland was listed as the eighth largest U.S. coal producer. At Friday’s market close, Westmoreland shares were trading at 12 cents on the Nasdaq exchange.
According to the press release issued Tuesday, the restructuring agreement “provides that the $90 million outstanding under the Company’s existing $110 million bridge loan facility, which it entered into in May 2018 (the “Bridge Loan”), will be refinanced with a new $110 million DIP facility, of which $90 million has been drawn, subject to Bankruptcy Court approval. The DIP financing and cash flow from operations are expected to provide adequate liquidity to support Westmoreland’s U.S. and Canadian business throughout the restructuring process. The superpriority non-amortizing DIP facility bears interest at the same rate as the Bridge Loan.”
Click here to read the full press release.
