Westmoreland Coal Company (“Westmoreland” or “the Company”)
(OTCMKTS: WLBA) announced today it has entered into a restructuring
support agreement (“RSA”) with members of an ad hoc group of
lenders (the “Ad Hoc Group”) that hold approximately 76.1% of the
Company’s term loan, approximately 57.9% of its senior secured
notes, and approximately 79.1% of its bridge loan. To implement the
RSA, Westmoreland today filed 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.
In addition, Westmoreland affiliate Westmoreland Resource
Partners, LP (NYSE: WMLP) (“WMLP”) simultaneously filed for relief
under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy
Court for the Southern District of Texas, Houston Division. WMLP
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. WMLP intends to continue working constructively with an
ad hoc group of its secured lenders (the “WMLP Ad Hoc Group”) in
connection with a value-maximizing sale and marketing process that
began prior to the commencement of WMLP’s chapter 11 case.
Westmoreland’s Canadian entities and Westmoreland Risk
Management, Inc. are excluded from the voluntary petitions.
Westmoreland’s operations in the U.S. and Canada are cash flow
positive and liquidity from operations combined with the Company’s
Debtor-In-Possession (“DIP”) financing is sufficient to continue
operating its mines in the normal course of business, without any
expected impact to current output levels. Importantly, Westmoreland
anticipates no staff reductions as a result of the restructuring
announcement.
“After months of thoughtful and productive conversations with
our creditors, we have developed a plan that allows Westmoreland to
operate as usual while positioning Westmoreland for long-term
success,” said Michael Hutchinson, Westmoreland’s Interim Chief
Executive Officer. “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. 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.”
In support of the RSA, Westmoreland launched a business
transformation aimed at significantly increasing cash flow for all
operational and support areas of the business. Initiatives
identified by Westmoreland are expected to yield significant annual
run rate savings from operational, commercial and overhead
efficiencies.
RSA Terms and DIP Financing
The RSA 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.
Under the RSA, the Ad Hoc Group has agreed to act as a stalking
horse bidder to acquire substantially all of Westmoreland’s
business assets. Separately, WMLP will continue its sale
process.
The RSA addresses Westmoreland’s liabilities, including funded
debt and other obligations, and provides the means for it to
continue operating in the normal course of business. For
additional information, please refer to the Company’s current
report on Form 8-K filed along with this announcement.
Both Westmoreland and WMLP have filed “first day” motions with
the Bankruptcy Court. When granted, these motions will enable
day-to-day operations, regular payment of employee wages and
benefits, and payment to key trade creditors for goods and services
provided on or after the filing date to continue as usual.
Additional information on the process, including court filings
and information about the claims process, is available at
www.donlinrecano.com/westmoreland or through Westmoreland’s
dedicated restructuring hotline at (800) 499-8519.
Kirkland & Ellis LLP is acting as legal counsel to
Westmoreland; Centerview Partners LLC is acting as investment
banker and financial advisor; Alvarez & Marsal is acting as
restructuring adviser; and McKinsey Recovery & Transformation
Services U.S., LLC is acting as an operational advisor. Jones
Day is acting as legal counsel and Lazard Freres is acting as
investment banker to the Conflicts Committee of the board of
directors of Westmoreland Resource Partners, GP, general partner of
WMLP.
About Westmoreland Coal Company
Westmoreland Coal Company (OTCMKTS: WLBA) is the oldest
independent coal company in the United States. Westmoreland’s coal
operations include surface coal mines in the United States and
Canada, underground coal mines in Ohio and New Mexico, a char
production facility, and a 50% interest in an activated carbon
plant. Westmoreland also owns the general partner of and a majority
interest in Westmoreland Resource Partners, LP, a publicly-traded
coal master limited partnership. For more information, visit
www.westmoreland.com.
About Westmoreland Resource Partners, LP
Westmoreland Resource Partners, LP is a low-cost producer of
high-value thermal coal. It markets its coal primarily to large
electric utilities with coal-fired, base-load scrubbed power plants
under long-term coal sales contracts. For more information about
Westmoreland Resource Partners, LP (NYSE: WMLP), please visit
www.westmorelandmlp.com.
Forward Looking Statements
This release contains forward-looking statements about
Westmoreland and WMLP. The companies claim the protection of
the safe -harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements neither of historical
fact nor guarantees or assurances of future performance. Because
forward-looking statements related to the future, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict and could cause actual future events and
results to differ materially from those expressed in the
forward-looking statements. Forward-looking statements include, but
are not limited to, statements regarding: the expected beneficial
outcomes of the filing for relief under chapter 11 of the U.S.
Bankruptcy Code or other restructuring process transactions; asset
sales; first day motions; the RSA; DIP financing; the future
position of the companies; and the outcomes of the transformation
initiative. These and other forward-looking statements
regarding Westmoreland’s and WMLP’s business outlook are based on
Westmoreland’s and WMLP’s current expectations and assumptions
regarding their businesses, the economy, demand for their products,
success in completing their transformation and restructuring
processes, and other future conditions. These risk factors, and
others, are included in reports on file with the Securities and
Exchange Commission for Westmoreland and WMLP. Westmoreland
and WMLP caution you against relying on any of these
forward-looking statements. Westmoreland and WMLP undertake no
obligation to publicly update or revise any forward-looking
statements.
Contact:
Brian Schafferbschaffer@prosek.com(646) 503-5971
Or
Kristin Colekcole@prosek.com(310) 652-1411