Westmoreland Coal Co., the sixth-largest coal-mining business in the United States with 19 mines in six states and Canada, announced that it has filed for Chapter 11 bankruptcy and entered into a restructuring agreement with lenders in the face of $1.4 billion in debt.
A restructuring support agreement with an ad hoc group of lenders will provide that an existing $110 million bridge loan will be refinanced, the company said. That is expected “to provide adequate liquidity” to support its U.S. and Canadian business during the restructuring, the Denver Post reported.
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 chief executive officer, 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.
Westmoreland is among several coal companies that have filed for bankruptcy protection or continue to struggle as concerns about greenhouse gas emissions from coal-fueled power plants have grown, and natural gas and renewable energy have become increasingly more economical than coal. There has been a push by environmental organizations as well as some businesses in this country and others to stop investing in coal companies as a way to battle climate change.
Coal companies and trade associations have expressed more optimism about the industry’s fate as the Trump administration has moved to roll back regulations of carbon dioxide emissions that were key to the Obama administration’s plan to reduce greenhouse gases.
Moves to divest from coal have met some push-back, including in Colorado, where Westmoreland is based. Some western Colorado counties as well as the Wyoming state treasurer threatened to shift their business from the San Francisco-based Bank of the West when it said this summer that it would stop investing in certain coal operations, oil and gas drilling in the Arctic and tobacco-related businesses.