National Coal amends exchange agreement, issues $8 million more stock for 10½% notes

By Susanna Moon

Chicago, June 9 - National Coal Corp. said it added more time for exchanges of its 10½% senior secured notes due 2010 and swapped a further $8 million for stock.

The extra time comes from an amendment to the agreement under which it agreed to issue stock in exchange for the notes, according to an 8-K filing with the Securities and Exchange Commission.

Under the revised agreement, the settlement date was extended to June 9 from June 3. Also, for any settlements that occur after June 1, only the principal amount of the notes will be exchanged for common stock and all accrued interest will be paid in cash on the next scheduled interest payment date.

The exchanges are being made under a letter agreement reached on May 20 with Neuberger Berman, LLC, which is representing some of its clients who hold the notes.

The company said that on June 2, the representative elected to exchange $3 million worth of the 10½% notes for 396,476 shares of common stock. This portion settled on June 4.

On June 6, the representative chose to exchange $5 million of notes for 660,793 common shares. This portion settled on June 9.

As previously reported, the company issued 278,279 shares of common stock in exchange for $2 million of notes on May 29. Noteholders also received $95,083.22 of accrued interest.

For each $1,000 principal amount of notes, the holders will receive a number of shares equal to the quotient of (a) $900 plus accrued interest divided by (b) $6.81.

Settlement of the full offer will occur on or before June 3 and may occur in partial amounts on multiple dates, a previous filing noted.

The notes were sold as part of a $55 million issue of units in December 2005. Each unit included one note and one warrant to purchase about 31.5 shares of the company's stock at $8.50 per share.

The Knoxville, Tenn.-based coal producer struck a similar deal with Neuberger Berman in February. Under that agreement, National Coal said it would issue stock in exchange for $2 million to $10 million of the notes, and the number of shares issued per note was equal to 82% of par plus accrued interest divided by $4.85.

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