Westmoreland Completes Oxford Transactions and Acquires Buckingham Coal Company
January 02 2015 - 7:00AM
Business Wire
Transactions pave the way for Westmoreland
to unlock value through MLP drop-down strategy and complement
stable cash flow-generating business model
Westmoreland Coal Company (NasdaqGM: WLB, “Westmoreland”),
Oxford Resource Partners, LP (NYSE: OXF, the “MLP”) and Oxford
Resources GP, LLC, the general partner of Oxford (the “GP”), today
announced the completion of Westmoreland’s acquisition of the GP
and Westmoreland’s contribution of certain royalty-bearing coal
reserves to the MLP in return for MLP common units (the
“Contribution”), as well as Westmoreland’s acquisition of
Buckingham Coal Company, LLC.
The completion of the GP acquisition and the Contribution
provide Westmoreland with a platform to implement a value-creating
drop-down strategy, pursuant to which it intends to periodically
contribute certain U.S. and Canadian coal assets to the MLP in
exchange for a combination of cash and additional limited partner
interests. Westmoreland expects these transactions to unlock value
that is inherent in Westmoreland’s stable cash flow-generating
business model, to the benefit of both its stakeholders and the
MLP’s unitholders. The MLP will continue to operate as a
stand-alone, publicly traded master limited partnership, with
Westmoreland owning 77% of the fully diluted limited partner
interests.
“We are pleased that these strategic transactions have come to a
successful close and excited for Westmoreland to enter the MLP
space,” stated Keith E. Alessi, Westmoreland’s Chief Executive
Officer. “We believe our strategy with respect to the MLP will help
ensure our continued long-term growth.”
“Oxford is very pleased that it has been able to join with
Westmoreland,” said Oxford’s President and Chief Executive Officer,
Charles C. Ungurean. “This is the culmination of our efforts to
bring increased value to our unitholders. We believe that this
represents a great opportunity for our company, unitholders,
employees and customers, as well as providing a MLP vehicle for
Westmoreland and its shareholders. This represents a win for all
stakeholders.”
Westmoreland paid a total of $30.0 million in cash to acquire
the GP, and received 4,512,500 common units of the MLP (on a
post-split basis following the previously disclosed 12-to-1 reverse
split of the MLP’s common and general partner units) as
consideration for the Contribution. The closing of these
transactions followed the successful restructuring of both
Westmoreland’s and the MLP’s debt arrangements, as well as the
approval by the MLP’s public unitholders of the Contribution and
the MLP’s equity restructuring through certain previously announced
amendments to its partnership agreement.
In connection with the closing, the MLP’s name was changed to
Westmoreland Resource Partners, LP (“Westmoreland LP”) and the name
of the GP was changed to Westmoreland Resources GP, LLC. The common
units of Westmoreland LP will trade on the NYSE under the symbol
“WMLP”.
On January 1, 2015, Westmoreland also completed its acquisition
of Buckingham Coal Company, LLC, an Ohio-based coal supplier, for a
total cash purchase price of $34.0 million, subject to customary
post-closing adjustments. Separately, an affiliate of Westmoreland
entered into a five-year coal supply agreement with AEP Generation
Resources Inc. (“AEP”), which includes an obligation to purchase a
minimum of 5.5 million tons of coal.
“Westmoreland is happy to implement a long-term supply
relationship with AEP,” said Mr. Alessi. “We were able to realize
significant cost savings through this acquisition and we expect our
supply agreement will provide additional value to our
shareholders,” he added.
About Westmoreland Coal Company
Westmoreland Coal Company is the oldest independent coal company
in the United States. Westmoreland’s coal operations include
sub-bituminous and lignite coal mining in the Western United States
and Canada, a char production facility, and a 50% interest in an
activated carbon plant. Its power operations include ownership of
the two-unit ROVA coal-fired power plant in North Carolina. For
more information, visit www.westmoreland.com.
About Oxford Resource Partners, LP
Oxford Resource Partners, LP is a low-cost producer of
high-value steam coal in Northern Appalachia. Oxford markets its
coal primarily to large electric utilities with coal-fired,
base-load scrubbed power plants under long-term coal sales
contracts. For more information, visit www.oxfordresources.com.
Cautionary Note Regarding Forward-Looking Statements
This release may contain “forward-looking statements.”
Forward-looking statements can be identified by words such as
“anticipates,” “intends,” “plans,” “seeks,” “believes,”
“estimates,” “expects” and similar references to future periods.
These statements involve known and unknown risks, which may cause
actual results to differ materially from results expressed or
implied by the forward-looking statements. These risks include
factors such as the uncertainty of negotiations to result in
agreements or completed transactions, the uncertain nature of the
expected benefits from the actual or expected transactions, the
uncertain nature of the announced transactions, the ability to
complete such transactions, risks associated with the integration
of acquired assets, risks associated with the coal industry or the
economy generally, and other such matters discussed in the “Risk
Factors” sections of both Westmoreland’s and Oxford’s 2013 annual
reports on Form 10-K and their subsequent quarterly reports on Form
10-Q filed with the Securities and Exchange Commission. The
forward-looking statements in this release speak only as of the
date of this release. Although either or both of Westmoreland and
Oxford may from time to time voluntarily update their prior
forward-looking statements, they disclaim any commitment to do so
except as required by securities laws.
Westmoreland Coal CompanyKevin Paprzycki, 855-922-6463orOxford
Resource Partners, LPDaniel M. Maher, 614-643-0314