Rhino Resource exploring alternatives to extend or replace facility

By Caroline Salls

Pittsburgh, Nov. 6 – Rhino Resource Partners LP said the classification of its credit facility balance as a current liability raises substantial doubt about its ability to continue as a going concern for the next 12 months, according to a 10-Q filed Friday with the Securities and Exchange Commission.

The company said it amended its senior credit facility in April 2015 to extend the expiration date to July 2017 from July 2016 if it achieves a specified leverage ratio and liquidity amount.

Based on current projections, Rhino said its normal operating forecast indicates that it will not meet either of the extension conditions and that its $48 million credit facility liability as of Sept. 30 should be classified as a current liability.

As of Sept. 30, the company’s available liquidity was $9.1 million, including cash on hand of $100,000 and $9 million available under the amended and restated credit agreement. The company’s leverage ratio was 3.2 to 1 as of Sept. 30.

According to the 10-Q, Rhino is analyzing multiple options to meet the credit facility contingent extension conditions, including potential sales of non-core assets. The company said it is also considering alternative financing options that could result in a new long-term credit facility with a potential five-year term.

If it is unable to meet the extension conditions and the expiration date of the credit agreement reverts to July 2016, Rhino said it will have to secure alternative financing to replace the credit facility by the expiration date order to continue normal business operations. If we are unable to extend the expiration date or secure a replacement facility, the company said it may not be able to generate adequate cash flow from operations to fund its business.

Also, given the continued weak demand and low prices for met and steam coal, Rhino said it may not be able to continue to give the required representations or meet all of the covenants and restrictions included in its credit facility, which means the company would need a waiver from its lenders in order to continue to borrow under the credit agreement.

The company said it continues to take measures, including the suspension of cash distributions on its common and subordinated units and cost and productivity improvements to enhance and preserve liquidity so it can fund ongoing operations and necessary capital expenditures and meet its financial commitments and debt service obligations.

The producer, processer and seller of coal is based in Lexington, Ky.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.