Alpha refinances bankruptcy exit loan with $260 million of facilities

By Susanna Moon

Chicago, May 2 – Alpha Natural Resources, Inc. said it obtained a new $60 million accounts receivable purchase facility with Hitachi Capital America Corp. and a new $200 million letter-of-credit facility with Citibank, NA.

Alpha Natural also has paid off its term loan under the $125 million credit agreement from the time of the company’s emergence from bankruptcy, according to a company notice.

Some of the proceeds of the accounts receivable purchase facility will be used for liquidity that was spent to pay off the existing term loan. The new letter-of-credit facility replaces the previous one established as part of the exit facility.

“After reviewing our 2017 business plan, current liquidity and future needs, we decided that the best course of action was to pay off the existing term loan,” David Stetson, Alpha chief executive officer, said in the press release.

“The current environment for metallurgical coal, our strong cash balance and the current cost of debt all contributed to our decision to retire the term loan early.”

As for the new loans, Stetson said, “While we have excellent working capital, we wanted to ensure access to additional liquidity as Alpha continues to provide our customers with a reliable supply of high-quality metallurgical and thermal coals in 2017 and beyond.

“We explored various financing alternatives to replace the exit facility, and the opportunities presented by HCA and Citi are the best fit for Alpha at this time as these new facilities provide us with the greatest flexibility and lowest borrowing costs of all the options we considered.”

GMP Securities was the investment banker for the accounts receivable purchase facility.

As reported, Alpha emerged from Chapter 11 bankruptcy protection on July 26, 2016 as a smaller, privately held company operating 18 mines and eight preparation plants in West Virginia and Kentucky.

Alpha Natural Resources is a Bristol, Va., coal miner.

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