Westmoreland Coal Company announced on May 22 that it has secured a new financing commitment for $110 million from an ad hoc group of the company’s existing secured creditors holding approximately 79 percent of its term loan and approximately 79 percent of its senior secured notes.
Proceeds from the financing will provide additional liquidity and will be used to fully repay both the San Juan term loan and the existing asset-based revolvers, simplifying Westmoreland’s capital structure. The additional liquidity will provide more time to continue negotiations to develop a comprehensive restructuring plan that will right-size capital structure and better ensure the long-term viability of Westmoreland.
“We appreciate the confidence our secured creditors continue to show through their increased financial support and their constructive ongoing dialogue,” said Westmoreland’s Interim Chief Executive Officer, Michael Hutchinson. “Today’s announcement underscores the value Westmoreland delivers to its communities, customers and employees today and will deliver long into the future. Securing this financing is a meaningful step towards simplifying our capital structure while providing additional liquidity to the parent.”
“This financing also provides us with the financial flexibility to develop a longer-term plan while soliciting input from a number of our key constituents, who all want to see Westmoreland continue to grow and prosper,” Hutchinson continued. “In the months ahead, we will continue our evaluation and determine the appropriate strategic, operational and financial structure to support the continued future growth of our business.”
The following is a summary of the key terms of the financing package:
• $90 million available immediately, plus $20 million delayed draw availability, in the form of a new $110 million delayed draw term loan from the Ad Hoc Group, secured by substantially all of Westmoreland’s U.S. and Canadian assets;
• Flexibility to convert the term loan into a post-petition financing package should the company pursue an in-court restructuring; and
• Westmoreland’s existing secured creditors will receive a lien, junior to the senior lien securing the financing, on substantially all of the company’s domestic assets that did not previously secure existing debt.