Westmoreland Coal is in trouble
Download Full Report
Key Findings
The immediate source of Westmoreland’s current financial distress, and a potential trigger for a bankruptcy filing for the company, centers on $300 million in debt owed by its limited-partnership subsidiary, Westmoreland Resource Partners LP (WMLP).
Because of its debt load, Westmoreland Coal has little room to maneuver.
Westmoreland’s Beulah Mine in North Dakota, next to the Coyote Generating Plant, has struggled since mid-2016 after that plant’s coal contract was also lost to a competitor.
Executive Summary
Colorado-based thermal-coal producer Westmoreland Coal Co, which had $1.5 billion in revenue and 3,200 employees in 2016, has been losing money quarter after quarter for the past few years as electricity-generation markets have moved away from coal.
The company’s difficulties are farreaching. Its holdings include major assets across a broad geographic area that includes Ohio, Montana, Wyoming, New Mexico, and Alberta, Canada.
The company has a market capitalization of only about $10 million (as of Feb. 15), following a 97 percent fall in its stock price over the past year, and shares are now trading well under a dollar. This stock collapse has occurred as the broader stock market has risen substantially. Westmoreland Coal is weighed down by more than $1.6 billion in debt, according to S&P Global Ratings, which gives them a credit rating of CCC, a junk rating that is so far below that of investment grade debt that it can be considered speculative. S&P Global Ratings downgraded Westmoreland this past November and warned at the time of possible default.
The company’s CEO left at the end of November, and Westmoreland today is negotiating with lenders in talks that could allow those lenders to take ownership of Westmoreland assets in Ohio and Wyoming.
Please view full report PDF for references and sources.
