Westmoreland nearly finished with bankruptcy proceedings

GAZETTE PHOTO / Theresa Davis

The Kemmerer coal mine was recently sold by Westmoreland Coal Company to Western Coal Acquisition Partners. Westmoreland sold nearly all of its mining assets as part of a bankruptcy financial restructuring plan.

Nearly six months after filing for relief, Westmoreland Coal Company has emerged from Chapter 11 bankruptcy, according to documents filed in a Houston, Texas, bankruptcy court and a statement from the coal company.

The coal company reorganized by selling nearly all of its mining assets to Westmoreland Mining, a new entity created by the company’s creditors.

Westmoreland Resource Partners, LP, previous owner of the Kemmerer mine, remains in Chapter 11 proceedings. Westmoreland owned the Kemmerer coal mine from January 2012 until February of this year. Western Coal Acquisition Partners was the sole bidder for the Kemmerer mine, and purchased it for $215 million.

Westmoreland was delisted from the NASDAQ in April 2018, after its stock prices closed at 20 cents a share.   

In May of 2018, the company announced that it had obtained $110 million in additional funding from a group of company creditors.

But the funding wasn’t enough to counter a shaky coal market and the company’s $1 billion in debt. Westmoreland filed for Chapter 11 bankruptcy relief in October and prepared for a thorough financial restructuring. 

Westmoreland shocked Kemmerer retirees late last year when it petitioned the bankruptcy court to end collective bargaining agreements with the United Mine Workers of America at the Kemmerer and Beulah coal mines.

The coal company referred to the pensions and health care coverage in court as “burdensome legacy liabilities.”

Westmoreland made the case that no potential buyer wanted to purchase the mine if it was attached to the bargaining agreements with the union.

Tom Clarke, Western Coal Acquisition Partners CEO, agreed that his company couldn’t afford to pay the benefits of the agreements. But he said his company would continue to negotiate with the United Mine Workers of America to reach a solution for Kemmerer miners.

The union is also lobbying for national legislation that would restore pensions and benefits to retired Westmoreland miners.

The bankruptcy judge granted the coal company’s petition, effectively freezing pensions and health care benefits for those retired Westmoreland coal miners.

In the midst of bankruptcy, Westmoreland also petitioned the court to implement a “valued employee retention program.” The retention program gave bonuses to 243 employees to persuade them to stay in the midst of bankruptcy proceedings.

Westmoreland Coal CEO Gary Kohn resigned in January, citing personal reasons. Kohn had received $1.2 million in bonuses prior to his resignation. 

According to the Westmoreland release, interim CEO Michael Hutchinson will retire from Westmoreland at the end of the restructuring process.

Westmoreland said the emergency from bankruptcy and reorganization and selling of assets will produce an “enhanced financial flexibility, a stronger balance sheet and a renewed ability to focus on providing reliable and affordable energy products.”

According to Westmoreland’s website, the company owns seven coal mines in Canada and seven in the U.S.

The coal company’s bankruptcy saga, combined with unclear plans for the Naughton power plant, have made unclear the future of Lincoln County’s energy-reliant economy.

An August 2018 publication by the Powder River Basin Resource Council stated that Westmoreland’s yearly ad valorem taxes levied on mineral production to Lincoln County averaged around $9 million.

Lincoln County did hire a law firm to represent the county’s financial interests in the Westmoreland bankruptcy case. The coal company paid Lincoln County nearly $5 million in taxes in November.