Company files for Chapter 11 in face of $1.4B in debt
Coloradobased Westmoreland Coal Co., the country’s sixthlargest coalmining business with 19 mines in six states and Canada, announced Tuesday 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.
Westmoreland, which has its corporate headquarters in Englewood, employs nearly 3,000 people across its operations, which include mines in Wyoming, Montana, New Mexico and North Dakota, and several subsidiaries. It has no mines in Colorado.
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.
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 credi tors, we have developed a plan that allows Westmoreland to operate as usual while positioning Westmoreland for longterm 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 longterm 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.
Westmoreland is among several coal companies that have filed for bankruptcy protection or continue to struggle as concerns about greenhouse gas emissions from coalfueled 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.
Stan Dempsey Jr., president of the Colorado Mining Association, said he doesn’t think Westmoreland’s announcement will have much of an impact in Colorado or on the coal industry overall.
The more significant bankruptcies for Colorado were those of Peabody Energy and Arch Coal, which both have mines in the state, he added.
“I think Peabody and Arch have done very well after exiting bankruptcy,” Dempsey said. “The Colorado mines and Colorado markets are stable.”
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.
However, the Sierra Club said Westmoreland’s bankruptcy is the latest sign of the industry’s “irreversible decline.”
“The best course for Westmoreland Coal Company moving forward must be to ensure that there are adequate funds to clean up its mines and to treat its workers with the respect they deserve, including assisting them as they transi tion to new economic opportunities in thriving industries like clean energy,” Mary Anne Hitt, senior director of the Sierra Club’s Beyond Coal campaign, said in a statement.
Moves to divest from coal have met some pushback, including in Colorado. Some western Colorado counties as well as the Wyoming state treasurer threatened to shift their business from the San Franciscobased 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 tobaccorelated businesses.