Mining company considers bankruptcy protection
BILLLINGS, MONT.» A Colorado-based coal company with mines in Montana and Wyoming is considering restructuring options, including filing for bankruptcy protection, after seeing demand drop and dealing with more than $1 billion in debt.
Westmoreland Coal Co. said in its annual report to shareholders and the Securities and Exchange Commission that it may seek bankruptcy protection from its creditors, or that an involuntary petition for bankruptcy could be filed against the company.
“Either of which could have a material adverse impact on our business, financial condition, results of operations and cash flows, and could place our shareholders at significant risk of losing all of their investment in our shares,” the report read.
The company hired financial and restructuring advisers in March to look at ways to strengthen Westmoreland’s balance sheet, including through a possible Chapter 11 bankruptcy reorganization. The company acknowledged in the annual report that a bankruptcy filing could risk losing the confidence of its customers and suppliers and cause additional revenue problems.
Jesse Noel, Westmoreland’s director of environmental and regulatory affairs, said Thursday that the three Montana mines are profitable and that he hopes at the end of the day they’re going to be there, Yellowstone Public Radio reported .
“We’ve got some debt to restructure and something is going to happen,” Noel said. “I don’t know what’s going to happen. It could be one of a number of things.”
Noel was participating in a discussion of coal and oil industry representatives at the invitation of U.S. Rep. Greg Gianforte, R-Montana.
Work at Westmoreland’s mines wouldn’t necessarily stop with a bankruptcy, just as it didn’t with other coal company bankruptcies in recent years including industry giants Arch Coal and Peabody Energy.
Of greater concern would be Westmoreland’s ability to secure private reclamation bonds at a time when it’s financially stressed, Andy Roberts said, research director for global coal markets at consulting firm Wood Mackenzie.
“Montana won’t allow them to mine without a bond, so there could be issues at Rosebud mine in that eventuality,”
Roberts said, referring to a Westmoreland mine that provides fuel to southeastern Montana’s Colstrip power plant. However, he added that the company already has set aside more than $200 million in bonds for reclamation work in Montana alone.
Westmoreland’s heavy debt load is made worse by problems specific to some of its mines, such as in New Mexico, where the company bought the San Juan mine that serves a power plant that’s looking to get out of coal earlier than expected, Roberts said.
Meanwhile, the company’s mines in Canada must contend with government policies that aim to phase out coal.
In all, the company has 14 mines and a power plant in the U.S. and Canada.
Westmoreland stock closed at just over 34 cents a share on the NASDAQ on Monday. The stock has been falling steadily since January 2017, when it cost $18.45 a share.