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Westmoreland Coal Company – Files Chapter 11, Announces Restructuring Support Agreement and DIP Financing

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October 9, 2018 – Westmoreland Coal Company (“Westmoreland”) and 36 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 18-35672. Concurrent with the filing, Westmoreland announced that it had entered into a restructuring support agreement (“RSA”) with holders of its bank and bond debt and that, pursuant to the terms of the RSA, lenders had agreed to provide $20 million in new debt under a proposed $110 million debtor-in-possession (“DIP”) financing facility. 
 
The Company, the oldest independent coal company in the United States, is represented by Patricia B. Tomasco of Jackson Walker.  Further board-authorized engagements include Kirkland & Ellis as general bankruptcy counsel, Centerview Partners LLC as financial advisor and Alvarez & Marsal as restructuring advisor. In a press release announcing the filing, Westmoreland advised that “…it has entered into a restructuring support agreement with members of an ad hoc group of lenders (the ‘Ad Hoc Group’) that hold approximately 76.1% of the Company’s term loan, approximately 57.9% of its senior secured notes, and approximately 79.1% of its bridge loan….The RSA provides that the $90 million outstanding under the Company’s existing $110 million bridge loan facility, which it entered into in May 2018 (the ‘Bridge Loan’), will be refinanced with a new $110 million DIP facility, of which $90 million has been drawn, subject to Bankruptcy Court approval.”
 
The Company’s petition notes between 10,000 and 25,000 creditors; assets of $770,455,520 as at August 31, 2018; and liabilities of $1,431,617,093 as at August 31, 2018.

On October 5, 2018, Westmoreland filed a Form 8-K with the SEC that noted the extension of existing forbearance agreements with holders of each of its senior secured notes, term loan and bridge loan through October 8, 2018. Westmoreland previously petitioned for Chapter 11 protection in 1994 and 1996.

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