8. LINES OF CREDIT AND LONG-TERM DEBT

The amounts outstanding under the Company’s long-term debt consisted of the following as of the dates indicated:



	Total Debt Outstanding December 31,
	2015			2014
	(In thousands)
8.75% Notes	$	350,000		$	350,000
WCC Term Loan Facility	327,172			350,000
WMLP Term Loan Facility	299,248			175,000
Capital lease obligations	71,168			109,351
Revolving line of credit	1,970			9,576
Other	7,251			4,062
Debt discount	(11,095		)	(13,202		)
Total debt outstanding	1,045,714			984,787
Less current installments	(40,822		)	(52,712		)
Total debt outstanding, less current installments	$	1,004,892		$	932,075

The following table presents aggregate contractual debt maturities of all long-term debt:



	As of December 31, 2015
	(In thousands)
2016	$	40,822
2017	31,846
2018	11,094
2019	307,733
2020	315,314
Thereafter	350,000
Total	1,056,809
Less: debt discount	(11,095		)
Total debt	$	1,045,714

8.75% Notes due 2022 (the “8.75% Notes”)

On December 16, 2014 (the “Closing Date”), the Company completed the issuance of $350.0 million in aggregate principal amount of 8.75% Notes. The 8.75% Notes were issued at a 1.292% discount, mature on January 1, 2022, and bear a fixed interest rate of 8.75% payable semiannually, on January 1 and July 1 of each year, commencing July 1, 2015. The 8.75% Notes are the Company’s senior secured obligations, rank equally in right of payment with all of the Company’s existing and future senior obligations, including the WCC Term Loan Facility defined below under “WCC Term Loan Facility,” and rank senior to all of the Company’s existing and future indebtedness that is expressly subordinated to the 8.75% Notes. The 8.75% Notes have not been registered under the Securities Act of 1933. In 2014, the Company capitalized debt issuance costs of $10.2 million in connection with the 8.75% Notes.

The Company may redeem all or part of the 8.75% Notes beginning on January 1, 2018 at the redemption prices set forth in the 8.75% Notes agreement, and prior to January 1, 2018 at 100% of the principal amount plus the applicable premium described in the 8.75% Notes agreement. In addition, at any time prior to January 1, 2018, the Company may redeem up to 35% of the aggregate principal amount of the 8.75% Notes with the net cash proceeds of certain equity offerings at a redemption price equal to 108.75% of the principal amount to be redeemed, together with accrued and unpaid interest, if any, to the redemption date, subject to certain conditions.

The 8.75% Notes are guaranteed by Westmoreland Energy LLC, Westmoreland Mining LLC and Westmoreland Resources, Inc. and their respective subsidiaries (other than Absaloka Coal, LLC, Westmoreland Risk Management, Inc. and certain other immaterial subsidiaries). The 8.75% Notes are not guaranteed by Westmoreland Canada LLC or any of its subsidiaries, nor are they guaranteed by Westmoreland Resources GP, LLC or Westmoreland Resource Partners, LP or any of its subsidiaries, referred to as the Non-guarantors.

The 8.75% Notes and the guarantees are secured equally and ratably with the WCC Term Loan Facility (i) by first priority liens on substantially all of the Company’s and the guarantor parties’ tangible and intangible assets (excluding certain equity interests, mineral rights and sales contracts and certain assets subject to existing liens) and (ii) subject to the WCC Revolving Credit Facility (as defined below), a second priority lien on substantially all cash, accounts receivable and inventory of the Company and the guarantors, and any other property with respect to, evidencing or relating to such cash, accounts receivable and inventory (whether now owned or hereinafter arising or acquired) and the proceeds and products thereof, subject in each case to permitted liens and certain exclusions (the “Notes Collateral”). The Notes Collateral is shared equally with the lenders under the WCC Term Loan Facility, who hold identical first and second priority liens, as applicable, on the Notes Collateral.

The 8.75% Notes restrict the Company’s and its restricted subsidiaries’ ability to, among other things, (i) incur, assume or guarantee additional indebtedness or issue preferred stock; (ii) declare or pay dividends on, or make other distributions in respect of, their capital stock; (iii) purchase or redeem or otherwise acquire for value any capital stock or subordinated indebtedness; (iv) make investments, other than permitted investments; (v) create certain liens or use assets as security; (vi) enter into agreements restricting the ability of any restricted subsidiary to pay dividends, make loans, or any other distributions to the Company or other restricted subsidiaries; (vii) engage in transactions with affiliates; and (viii) consolidate or merge with or into other companies or transfer all or substantially all of their assets.

The 8.75% Notes contains, among other provisions, events of default and various affirmative and negative covenants. As of December 31, 2015, the Company was in compliance with all covenants for the 8.75% Notes.

WCC Term Loan Facility due 2020

Effective as of the Closing Date, the Company entered into a WCC Term Loan Facility which provided for a $350.0 million term loan facility with a single advance made on the Closing Date. The WCC Term Loan Facility was issued at a 2.5% discount and matures on December 16, 2020. Borrowings under the WCC Term Loan Facility initially bear interest at one-month London Interbank Offered Rate (“LIBOR”) plus 6.50%. The interest rate at December 31, 2015 was 7.50%. In 2014, the Company capitalized debt issuance costs of $8.4 million in connection with the WCC Term Loan Facility.

The WCC Term Loan Facility contains customary affirmative covenants, negative covenants, and events of default. Pursuant to the terms and provisions of the Guaranty and Collateral Agreement, dated the Closing Date, the obligations under the WCC Term Loan Facility are secured by identical first and second priority liens, as applicable, on the Notes Collateral. As of December 31, 2015, the Company was in compliance with all covenants for the WCC Term Loan Facility.

The WCC Term Loan Facility is guaranteed by Westmoreland Energy LLC, Westmoreland Mining LLC, Westmoreland Resources, Inc. and certain other direct and indirect subsidiaries of the Company (other than Absaloka Coal, LLC, Westmoreland Risk Management, Inc., Westmoreland Canada, LLC, Westmoreland Resources GP, LLC, Westmoreland Resource Partners, LP and certain other immaterial subsidiaries).

WCC Term Loan Facility Add-on

On January 22, 2015, the Company amended the WCC Term Loan Facility to increase the borrowings by $75.0 million, for an aggregate principal amount of $425.0 million as of that date. The amendments to the WCC Term Loan Facility were made in connection with the acquisition of Buckingham Coal Company, LLC. Net proceeds were $71.0 million after a 2.5% discount, 1.5% broker fee, a consent fee of 1.17%, and $0.1 million of additional debt issuance costs.

In conjunction with the Kemmerer Drop, the Company amended the WCC Term Loan Facility to remove Kemmerer as a guarantor. In addition, $94.1 million of the proceeds received from WMLP related to the Kemmerer Drop were used to pay down the WCC Term Loan Facility.

WMLP Term Loan Facility due 2018

On December 31, 2014, WMLP entered into a WMLP Term Loan Facility which consists of a $175.0 million term loan, with an option for an additional $120.0 million in term loans for acquisitions, which was exercised on August 1, 2015 to finance the Kemmerer Drop. The WMLP Term Loan Facility matures in December 2018. Borrowings under the WMLP Term Loan Facility are secured by substantially all of WMLP’s physical assets. Proceeds from the credit facility were used to retire WMLP’s previously existing first and second lien credit facilities and to pay fees and expenses related to its existing credit facility, with the remaining proceeds being available as working capital.

As of December 31, 2015, the $299.2 million outstanding under the WMLP Term Loan Facility bears interest at a variable rate per annum equal to, at the WMLP’s option, the LIBOR floor of 0.75% plus 8.5% or the Reference Rate (as defined in the WMLP Financing Agreement). As of December 31, 2015, the WMLP Term Loan Facility had a cash interest rate of 9.25%, consisting of the LIBOR floor (0.75%) plus 8.5%.

The WMLP Term Loan Facility also provides for Paid-In-Kind Interest (“PIK Interest”) at a variable rate per annum between 1.00% and 3.00% based on WMLP’s total net leverage ratio. The rate of PIK Interest is recalculated on a quarterly basis with the PIK Interest added quarterly to the then outstanding principal amount of the term loan under the WMLP Term Loan Facility. PIK Interest under the WMLP Term Loan Facility was $6.9 million for the year ended December 31, 2015.

In connection with the Kemmerer Drop, the WMLP Term Loan Facility was amended on July 31, 2015 to (i) allow WMLP to make distributions in an aggregate amount not to exceed $15.0 million (previously $7.5 million) without pro forma compliance with the consolidated total net leverage ratio or fixed charge coverage ratio, and (ii) at any time that WMLP has a revolving loan facility available, require it to have liquidity of at least $7.5 million (previously $5.0 million), after giving effect to such distributions and applying availability under such revolving loan facility towards satisfying the liquidity requirement.

The WMLP Term Loan Facility contains customary financial and other covenants. As of December 31, 2015, WMLP was in compliance with all covenants under the terms of the WMLP Term Loan Facility.

The WCC Revolving Credit Facility

During the first quarter of 2014, the Company amended its WCC Revolving Credit Facility, or Revolver, to increase the maximum available borrowing amount to $60.0 million. On December 16, 2014, the Company further amended the WCC Revolving Credit Facility, decreasing the maximum borrowing amount to $50.0 million in the aggregate, consisting of a $30.0 million sub-facility available in the U.S. and a $20.0 million sub-facility available in Canada. Pursuant to a June 2, 2015 amendment to the WCC Revolving Credit Facility, Westmoreland has a total aggregate borrowing capacity of $75.0 million between June 15th and August 15 of each year. The Revolver may support an equal amount of letters of credit, which would reduce the balance available under the Revolver. At December 31, 2015, availability under the WCC Revolving Credit Facility was $28.2 million with an outstanding balance of $19.8 million supporting letters of credit and a $2.0 million drawn on the revolver. All extensions of credit under the revolver are collateralized by a first priority security interest in and lien upon the inventory and accounts receivable of substantially all of the Company’s subsidiaries (other than Absaloka Coal, LLC, Westmoreland Risk Management, Inc.,Westmoreland Resources GP, LLC, Westmoreland Resource Partners, LP and certain other immaterial subsidiaries). Pursuant to the Intercreditor Agreement, the holders of the 8.75% Notes and the WCC Term Loan Facility have a subordinate lien on these assets. The Revolver has a maturity date of December 31, 2018. The Company capitalized debt issuance costs of $0.7 million in 2014 related to the Revolver amendments.

Borrowings under the Revolver initially bear interest either at a rate 0.75% in excess of the base rate (as detailed in the Second Amended and Restated Loan Agreement) or at a rate 2.75% per annum in excess of LIBOR, at the Borrowers’ election. An unused line fee of 0.50% per annum is payable monthly on the average unused amount of the revolver.

The loan agreement contains various affirmative, negative and financial covenants. Financial covenants in the agreement include certain fixed charge coverage ratios. The fixed charge coverage ratios must meet or exceed certain specified minimums. The Company met these covenant requirements as of December 31, 2015.

Capital Leases

The Company engages in leasing transactions for equipment utilized in its mining operations. At December 31, 2015 and 2014, the capital leases outstanding had a weighted average interest rate of 4.51% and 4.66%, respectively, and mature at various dates beginning in 2016 through 2020. During the year ended December 31, 2015, the Company entered into $15.2 million of new capital leases.