Westmoreland increases term loan to $350 million as bonds downsized

By Sara Rosenberg

New York, Dec. 9 – Westmoreland Coal Co. upsized its six-year term loan to $350 million from $300 million and downsized its bond offering to $350 million from $400 million, according to a market source.

Pricing on the term loan is Libor plus 650 basis points with a 1% Libor floor and an original issue discount of 97½, the source said.

BMO Capital Markets is the lead on the deal.

Proceeds from the term loan and notes will be used to refinance existing debt, including the 10¾% senior secured notes.

The tender offer for the existing notes will expire on Friday.

The refinancing is being done in connection with the company’s combination with Oxford Resource Partners LP.

Under the agreement, Westmoreland will acquire Oxford’s general partner, Oxford Resources GP LLC, for $30 million plus an additional $3.5 million if a specified coal acquisition is completed within one year of the purchase agreement. In addition, Westmoreland will contribute some royalty-bearing coal reserves to Oxford in return for Oxford common units.

With the transaction, Oxford’s name will be changed to Westmoreland Resource Partners LP and Oxford Resources GP’s name will be changed to Westmoreland Resources GP LLC.

Closing is expected this quarter.

Englewood, Colo.-based Westmoreland and Columbus, Ohio-based Oxford are coal companies.

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