Item 1.03.
|
Bankruptcy or Receivership.
|
On October 9, 2018 (the
Petition Date
), Westmoreland Coal Company (the
Company
) and certain of its
subsidiaries, including Westmoreland Resource Partners, LP (
WMLP
) (collectively, the
Debtors
), filed voluntary petitions (the
Bankruptcy Petitions
) for relief under chapter 11 of
title 11 of the United States Code (the
Bankruptcy Code
) in the United States Bankruptcy Court for the Southern District of Texas (the
Bankruptcy Court
). The Companys Canadian entities and
Westmoreland Risk Management, Inc. are excluded from the Bankruptcy Petitions. The Debtors have filed a motion with the Bankruptcy Court seeking to jointly administer all of the Debtors chapter 11 cases (the
Chapter 11
Cases
) under the caption
In re Westmoreland Coal Company, et al
. The Debtors will continue to operate their businesses as
debtors-in-possession
under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of
the Bankruptcy Court. The Debtors have filed a series of first day motions with the Court that seek authorization to continue to conduct their business without interruption. These motions are designed primarily to minimize the effect of bankruptcy
on the Debtors operations, customers and employees.
The Company expects ordinary-course operations to continue substantially
uninterrupted during and after the commencement of the Chapter 11 Cases. Employees should expect no change in their daily responsibilities and to be paid in the ordinary course of business.
Restructuring Support Agreement
In
connection with its Chapter 11 filing, the Company announced today that it has reached an agreement (the
Restructuring Support Agreement
), executed on October 9, 2018, with members of an ad hoc group of noteholders and
lenders (the
Ad Hoc Group
) under (i) the Companys 8.75% Senior Secured Notes due 2022 (such notes, collectively, the
Prepetition First Lien Notes
) governed by that certain Indenture, dated as of
December 16, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the
Prepetition First Lien Notes Indenture
), by and among the Company, the guarantors named therein, and U.S. Bank National
Association, as trustee and collateral agent, (ii) the Companys Credit Agreement, dated as of December 16, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the
Prepetition First Lien Credit
Agreement
, and the loan governed thereby, the
Prepetition First Lien Term Loan
), by and among the Company, as borrower, the guarantors and lenders named therein and Wilmington Savings Fund Society, FSB, as agent, and
(iii) the Terms of Bridge Loans, attached as
Exhibit L
to the Prepetition First Lien Credit Agreement, dated as of May 21, 2018, among the Company, Westmoreland San Juan, LLC and Prairie Mines & Royalty ULC, as borrowers,
the guarantors and lenders named therein, and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent (as amended, restated, supplemented or otherwise modified from time to time, the
Prepetition Bridge Loan
Agreement
).
Pursuant to the terms of the Restructuring Support Agreement, and the Sale Term Sheet and Plan Term Sheet attached
as exhibits thereto, the Company and the Ad Hoc Group have agreed on the principal terms of a Chapter 11 plan pursuant to which the holders of the Prepetition First Lien Notes and Prepetition First Lien Term Loan will credit bid for and acquire the
Companys core assets and, in the event that any of the Companys
non-core
assets (as set forth on a schedule to the Sale Term Sheet) are not acquired by a third party, to credit bid for and acquire
such
non-core
assets.
The Restructuring Support Agreement contemplates the approval by the
Bankruptcy Court of the DIP Credit Agreement described below under the heading
Debtor-in-Possession
Financing.
The Restructuring Support Agreement includes an agreed timeline for the Chapter 11 Cases that, if met, would result in the Company closing on
a qualified bid and/or confirming a chapter 11 plan and emerging from bankruptcy on or before February 28, 2019. The proposed terms of the DIP Credit Agreement and the proposed terms of the plan of reorganization set forth in the Restructuring
Support Agreement are to be effectuated through the Chapter 11 Cases and remain subject to Bankruptcy Court approval.
The foregoing
description of the Restructuring Support Agreement does not purport to be complete and is qualified in its entirety by reference to the Restructuring Support Agreement filed as Exhibit 10.1 hereto and incorporated herein by reference.