Westmoreland Coal Co., the financially strapped supplier of coal to the San Juan Generating Station, obtained a $110 million bridge loan to Monday to help pay immediate debts.
A group of the company’s creditors holding nearly 80 percent of the company’s secured debt advanced the loan, according to a Westmoreland filing Wednesday with the Securities and Exchange Commission. The loan will pay the balance of a $125 million loan from New Mexico Capital Utility Corp., an affiliate of the Public Service Company of New Mexico, the state’s largest electric utility, which operates the San Juan plant in northwestern New Mexico, according to a Westmoreland news release. Westmoreland used the loan to purchase the San Juan Mine.
The coal company this week paid the $50.6 million outstanding on that loan, PNM spokesman Dan Ware said Wednesday. Ware said “operations will continue as normal” at the San Juan Generating Station and PNM anticipates no change in its current business mode due to Westmoreland’s announcement.
Westmoreland received $90 million of the bridge loan immediately with access to the remaining $20 million over time. To secure the loan, the company leveraged what remained of its uncommitted assets, including its U.S. subsidiaries and one Canadian subsidiary. The company filing Wednesday listed $1.4 billion in total liabilities at the end of 2017.
The creditors behind the loan, the “ad hoc group,” have first position. Other creditors will hold liens on Westmoreland assets in the U.S., according to a company statement.
The company was delisted April 25 from the Nasdaq stock index and on April 2 filed an earnings report suggesting “that substantial doubt exists regarding its ability to continue as a going concern.” Analysts at the time suggested the company was heading for bankruptcy protection.
On Tuesday, the company statement on its bridge loan suggested more to come. The loan allows “more time for the company and its advisers to continue negotiations” with the lenders “to develop a comprehensive restructuring plan that will right-size the company’s capital structure and better ensure the long-term viability of Westmoreland.”
The loan terms permit Westmoreland “flexibility to convert the term loan into a post-petition financing package should the company pursue an in-court restructuring,” according to the company statement Tuesday. A spokesman for the company said Westmoreland would not comment further.