Delivery alert

There may be an issue with the delivery of your newspaper. This alert will expire at NaN. Click here for more info.

Recover password

One of oldest coal companies in US files for bankruptcy

HELENA, Mont. — One of the oldest coal companies in the U.S. filed for bankruptcy protection Tuesday to deal with more than $1.4 billion in debt amid declining demand for the fuel.

Englewood, Colorado-based Westmoreland Coal Co. filed for voluntary Chapter 11 protection in U.S. Bankruptcy Court in Houston as part of a restructuring agreement with an unnamed group of lenders.

Westmoreland, which operates mines across the U.S. and Canada, including New Mexico, is the fourth major coal company to file for bankruptcy in the past three years, joining Peabody Energy Corp., Arch Coal and Alpha Natural Resources.

The company’s San Juan mine in New Mexico serves a power plant that’s looking to get out of coal use earlier than expected.

Westmoreland officials said in a statement that operations won’t be interrupted and there are no expected staff reductions.

Coal companies have struggled as demand drops due to a glut of cheap natural gas, the rise of renewable energy sources and plans by some states to reduce or eliminate coal from their energy portfolios.

There are no new coal plants being built in the U.S., and two major coal consumers, China and India, have canceled projects as they seek to reduce air pollution.

Westmoreland officials warned in August that declining industry conditions and significant debt “give rise to substantial doubt about our ability to pay our obligations as they come due,” according to a filing with the U.S. Securities and Exchange Commission.

Westmoreland has $770 million in assets and $1.4 billion in debt, according to the bankruptcy filing. One of its creditors is the U.S. Bureau of Indian Affairs, which Westmoreland owes $1.8 million in royalties, according to the bankruptcy filing.

The restructuring agreement, which must be approved by a judge, includes refinancing an outstanding loan and a “business transformation” meant to significantly increase cash flow, the company statement said, without providing details.

The group of lenders that holds a majority of Westmoreland’s debt also plans to bid for the company’s assets, the statement said. An affiliated company, Westmoreland Resource Partners, is being sold off separately.

In response to the bankruptcy filing, conservation groups renewed calls for Westmoreland to ensure it has enough money in reserve to clean up its mines and pay severance to workers if it ceases operations.

“Nothing can stop America’s shift away from coal and toward clean energy, but the transition should be managed to ensure workers are treated with respect and that vital environmental obligations are honored,” said Mary Anne Hitt of the Sierra Club.

Westmoreland officials have previously said the company is fully bonded to cover future reclamation work at its mines.

___

AP writer Matthew Brown in Billings, Montana, contributed to this report.

AlertMe

Advertisement

TOP |