Coverage: Coal company files for Chapter 11 protection
One of the oldest coal companies in the U.S. — Westmoreland Coal Co. — filed for bankruptcy protection Tuesday to deal with more than $1.4 billion in debt amid declining demand for the fuel.
Matt Volz of the Associated Press had the news:
Englewood, Colorado-based Westmoreland Coal Co. filed for voluntary Chapter 11 protection in U.S. Bankruptcy Court in Houston as part of a restructuring agreement with an unnamed group of lenders.
Westmoreland, which operates mines across the U.S. and Canada, is the fourth major coal company to file for bankruptcy in the past three years, joining Peabody Energy Corp., Arch Coal and Alpha Natural Resources.
Westmoreland officials said in a statement that operations won’t be interrupted and there are no expected staff reductions.
“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,” interim CEO Michael Hutchinson said in the statement.
Judith Kohler of The Denver Post reported that the company had told shareholders as far back as April that it was considering bankruptcy:
Westmoreland said it didn’t expect any staff reductions. The company announced to shareholders in April that it was considering seeking bankruptcy protection.
“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,” Michael Hutchinson, Westmoreland’s interim CEO, said in a statement. “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.”
The filing for voluntary Chapter 11 protection in U.S. Bankruptcy Court in Houston lists the Bureau of Indian Affairs and the Pension Benefit Guaranty Corp. among its 50 largest creditors with unsecured claims. Westmoreland has leases with the Crow Indian Tribe in Montana. The company reported about $770 million in assets.
The group of lenders, which holds about three-quarters of Westmoreland’s debt, will bid on the company’s assets as a way to the test the market, the company said. Westmoreland Resource Partners, an affiliate of the company, will be sold separately.
Sam Wilson of the Billings Gazette in Montana reported that the company is seeking permits to expand a Montana mine:
It’s unclear what, if any, impact the bankruptcy will have on the sprawling Rosebud Mine outside the town of Colstrip. Westmoreland’s press release stated that its “financing is sufficient to continue operating its mines in the normal course of business” and that it “anticipates no staff reductions” as a result of the filing.
The company is pursuing federal and state permits to expand the life of the mine. The state permit application is asking for a 15,000-acre expansion that would allow the company to extract an additional 104 million tons of coal through 2047.
The company’s most recent annual report also noted that the company did not have coal sale contracts beyond 2019 at the time. Westmoreland officials have, however, indicated they’ve been working to renegotiate contracts with the Colstrip power plant.
A spokeswoman for Westmoreland declined to comment specifically on the company’s Montana operations, but said the bankruptcy would have no immediate effect on the company’s mining plans.