Item 1.01 Entry into a Material Definitive Agreement
Bridge Loan Agreement
On May 21, 2018,
Westmoreland Coal Company (the
Company
) entered into a credit agreement with members of an ad hoc group (the
Ad Hoc Group
) of the Companys existing first lien lenders and creditors (the
Existing
Secured Creditors
and such debt, the
Existing Secured Debt
). The agreement will provide the Company and its subsidiaries with a new $110 million term loan, with an initial funding of $90 million and a delayed
draw funding of up to an additional $20 million, secured by a first lien on substantially all U.S. and Canadian assets, including 35% of the equity in the holding company for the Companys Canadian business not previously securing the
Existing Secured Debt, and guaranteed by all of the Companys material U.S. and Canadian subsidiaries (other than Westmoreland Resource Partners, LP, Westmoreland Resources GP, LLC and their subsidiaries), in each case, subject to customary
exceptions (the
Financing
).
A portion of the proceeds of the Financing have been used to refinance in full the Companys and its
subsidiaries existing asset-based revolving credit facilities and Westmoreland San Juan, LLCs existing term loan facility. The remaining proceeds will be used for working capital.
As part of the Financing, the Existing Secured Creditors have agreed to subordinate the liens securing the Existing Secured Debt to the liens securing the
Financing. In addition, the Company and its U.S. subsidiaries have granted to the Existing Secured Creditors a lien on substantially all of their U.S. assets securing the Financing that did not previously secure the Existing Secured Debt. All of the
Companys material U.S. subsidiaries that did not previously guarantee the Existing Secured Debt, and one Canadian subsidiary, Westmoreland Canadian Investments, LP, have also provided guarantees for the Existing Secured Debt.
The foregoing description of the new financing is qualified in its entirety by the full text of such agreement, which is attached hereto as Exhibit 10.1 and
is incorporated by reference herein.
Forbearance Agreement
On May 21, 2018, the Company and certain subsidiaries of the Company (the
Guarantors
and, together with the Company, the
Obligors
) entered into a Forbearance Agreement (the
Forbearance Agreement
) with certain holders (the
Supporting Holders
) of the Companys Senior Secured Notes due 2022 (the
Senior Secured Notes
) issued pursuant to the Indenture (as amended, supplemented, or modified from time to time, the
Indenture
), dated as of December 16, 2014, by and among the Company, the Guarantors party
thereto and U.S. Bank National Association, as trustee (in such capacity, the Trustee) and collateral agent (in such capacity, the Collateral Agent) thereunder. Pursuant to the Forbearance Agreement, the Supporting Holders
have agreed to forbear from exercising their rights and remedies under the Indenture or the related security documents until the earlier of (a) 12:01 a.m. New York City time on September 30, 2018 and (b) a Termination Event (as defined in
the Forbearance Agreement) (the
Forbearance Period
) with respect to certain potential events of default arising under section 6.01 of the Indenture. Pursuant to the Forbearance Agreement, the Supporting Holders have agreed, for
the duration of the Forbearance Period, to not deliver any notice or instruction to the Trustee directing the Trustee to exercise any of the rights and remedies under the Indenture or the related security documents with respect to any default caused
by (i) the Companys entry into the Bridge Loan Agreement, (ii) the Companys failure to pay interest due on the notes under the Indenture, (iii) the Companys failure to pay interest or principal due under its Term
Loan Credit Facility, (iv) any failure by Westmoreland Resource Partners, LP (the
MLP
) to pay interest or principal under its financing agreement or (v) any event, or entry into proceedings by the MLP, as described under
section 6.01(8) or (9) of the Indenture.
The foregoing description of the Forbearance Agreement is a summary only and is qualified in its entirety
by reference to the complete text of the Forbearance Agreement, a copy of which is attached as Exhibit 10.3 to this Current Report on Form
8-K
and incorporated herein by reference.
Sixth Supplemental Indenture
On May 21, 2018, the Company and the Guarantors entered into the Sixth Supplemental Indenture with San Juan Coal Company, a Delaware corporation, San Juan
Transportation Company, a Delaware corporation, Westmoreland San Juan Holdings, Inc., a Delaware corporation, Westmoreland San Juan, LLC, a Delaware limited liability company, Westmoreland Power, Inc., a Delaware corporation, Westmoreland Energy
Services, Inc. a Delaware Corporation, Westmoreland Canada LLC, a Delaware limited liability company, Westmoreland Canadian Investments, LP, a Quebec limited partnership, Absaloka Coal, LLC, a Delaware limited liability company, and Basin Resources,
Inc., a Colorado corporation
(collectively, the
New Guaranteeing Subsidiaries
), the Trustee and the Collateral Agent. The Sixth Supplemental Indenture joined the New Guaranteeing Subsidiaries as guarantors under the
Companys 8.75% Senior Secured Notes due 2022.
The foregoing description of the Sixth Supplemental Indenture is a summary only and is qualified in
its entirety by reference to the complete text of the Sixth Supplemental Indenture, a copy of which is attached as Exhibit 10.4 to this Current Report on Form
8-K
and incorporated herein by reference.