COAL FIRM SAYS REFINANCING WILL ERASE ITS CASH CRUNCH

Westmoreland Coal Co. on Thursday said it refinanced the debt of its mining units with $150 million in loans and lines of credit that will end the company's cash crunch and provide additional funds to upgrade its mines.

The Colorado Springs-based energy company received a $125 million loan arranged through PNC Capital Markets LLC and a $25 million line of credit from PNC Bank that will be used to pay off existing Westmoreland Mining LLC debt, provide cash to the parent company and meet the financial needs of Westmoreland's mining operations, the company said.

"This new financing meets our objectives to better match Westmoreland Mining LLC's debt payments with cash flow and permits Westmoreland Mining to make the capital investments necessary to meet customer requirements," Westmoreland Chairman Keith Alessi said.
The refinancing completes a restructuring begun 13 months ago, when Alessi took over as Westmoreland's chief executive, a role he has handed over to D.L. Lobb. Alessi sold off contracts to manage power plants, bought out a partner in the company's second-largest mine, refinanced debt on Westmoreland's power plants, slashed - overhead expenses and restated financial results.

Lobb called the latest refinancing "beneficial in a number of ways." He said it resulted from renegotiating coal sales contracts at its two largest mines, meaning about 90 percent of its coal is sold under terms that protect Westmoreland from increasing commodity costs and give the company predictable earnings and cash flow that allowed it to get the loans.

The refinancing and other recent moves put Westmoreland - which owns a North Carolina power plant and five mines in Montana, North Dakota and Texas - in a position in which it can grow either by expanding its existing mines or buying new properties.
Westmoreland stockholders have responded by bidding the company's stock up to a 10-month high of $21 on March 16, even as the rest of the market has declined. The company's stock fell in recent days but recovered Thursday by advancing 26 cents to $19.06. Thursday's announcement was made after the nation's stock markets closed.
 
CONTACT THE WRITER:
636-0234
or wayneh@gazette.com