Westmoreland Successfully Exits ROVA Power Supply Agreements; Will Collect $12 Million in Net Cash Collateral
October 02 2017 - 8:00AM
Westmoreland Coal Company (Nasdaq:WLB) today announced that it
terminated its power purchase contracts with BP Energy Company and
assigned its substitute energy agreement with Virginia Electric and
Power Company, a subsidiary of Dominion Energy, effective October
1, 2017. As a result, Westmoreland will no longer have any
obligation to provide power and capacity to Dominion, or to
purchase power from BP which, in turn, secured the release of the
related cash collateral. Westmoreland will receive $12
million, comprised of $22 million of cash collateral less a final
$10 million make-whole payment to BP. Previously,
Westmoreland expected to receive a similar amount in net cash
collateral releases as the contracts ran off through early 2019.
“I want to congratulate the team on their hard work unwinding
the overhang from this non-core power asset. We recently
announced the sale of the physical ROVA facility, which is expected
to close later this month and will generate $5 million of cash
receipts. This $5 million, plus the accelerated receipt of $12
million from exiting the power agreements, will result in
significant cash inflows this year as well as the elimination of
the otherwise ongoing annual cash flow drag of approximately $5
million from the ROVA operation,” said Kevin Paprzycki,
Westmoreland’s Chief Executive Officer.
About Westmoreland Coal Company
Westmoreland Coal Company is the oldest independent coal company
in the United States. Westmoreland’s coal operations include
surface coal mines in the United States and Canada, underground
coal mines in Ohio and New Mexico, a char production facility, and
a 50% interest in an activated carbon plant. Westmoreland
also owns the general partner of and a majority interest in
Westmoreland Resource Partners, LP, a publicly-traded coal master
limited partnership (NYSE:WMLP). For more information, visit
www.westmoreland.com.
Cautionary Note Regarding Forward-Looking
Statements
Forward-looking statements are based on Westmoreland’s current
expectations and assumptions regarding its business, the economy
and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. Actual results may differ materially
from those contemplated by the forward-looking statements.
Westmoreland cautions you against relying on any of these
forward-looking statements. They are statements neither of
historical fact nor guarantees or assurances of future
performance. Possible events or factors that could cause
actual results or performance to differ materially from those
anticipated in Westmoreland’s forward-looking statements include,
but are not limited to the following:
- Westmoreland’s ability to consummate the sale of the ROVA and
Coal Valley facilities on reasonable terms or at all;
- existing and future legislation and regulation affecting both
Westmoreland’s coal mining operations and its customers' coal
usage, governmental policies and taxes, including those aimed at
reducing emissions of elements such as mercury, sulfur dioxides,
nitrogen oxides, particulate matter or greenhouse gases;
- the effect of the Environmental Protection Agency's and
Canadian and provincial governments' inquiries and regulations on
the operations of the power plants to which Westmoreland provides
coal;
- Alberta's Climate Leadership Plan to phase out coal-fired
electricity generation by 2030;
- Westmoreland’s substantial level of indebtedness and its
ability to adhere to financial covenants related to its borrowing
arrangements;
- Westmoreland’s relationships with, and other conditions
affecting, its customers, including how power prices affect its
customers’ decision to run their plants;
- seasonal variations and inclement weather, which may cause
fluctuations in Westmoreland’s operating results, profitability,
cash flow and working capital needs related to Westmoreland’s
operating segments;
- Westmoreland’s ability to manage the San Juan entities;
- the effect of legal and administrative proceedings,
settlements, investigations and claims, including any related to
citations and orders issued by regulatory authorities, and the
availability of related insurance coverage;
- changes in Westmoreland’s post-retirement medical benefit and
pension obligations and the impact of the recently enacted
healthcare legislation on Westmoreland’s employee health benefit
costs;
- inaccuracies in the estimates of Westmoreland’s coal
reserves;
- Westmoreland’s potential inability to expand or continue
current coal operations due to limitations in obtaining bonding
capacity for new mining permits, and/or increases in Westmoreland’s
mining costs as a result of increased bonding expenses;
- the effect of prolonged maintenance or unplanned outages at
Westmoreland’s operations or those of its major power generating
customers;
- the inability to control costs, recognize favorable tax credits
and/or receive adequate train traffic at Westmoreland’s open market
mine operations;
- competition within Westmoreland’s industry and with producers
of competing energy sources;
- the availability and costs of key supplies or commodities, such
as diesel fuel, steel and explosives;
- potential title defects or loss of leasehold interests in
Westmoreland’s properties, which could result in unanticipated
costs or an inability to mine the properties; and
- and other risks, uncertainties and assumptions described in
Westmoreland’s periodic filings with the Securities and Exchange
Commission, including in "Risk Factors" in Westmoreland’s most
recent Annual Report on Form 10-K and subsequent filings.
Any forward-looking statements made by Westmoreland in this news
release speak only as of the date on which it was made.
Westmoreland undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
For further information please contact
Gary Kohn Chief Financial
Officer1-720-354-4467gkohn@westmoreland.com