Lines of Credit and Long-Term Debt

9 Months Ended

Sep. 30, 2011

Lines of Credit and Long-Term Debt [Abstract]

LINES OF CREDIT AND LONG-TERM DEBT

5. LINES OF CREDIT AND LONG-TERM DEBT

The amounts outstanding under the Company’s lines of credit and long-term debt consist of the following:

	Total Debt Outstanding
	September 30,			December 31,
	2011			2010
	(In thousands)
Corporate:
Senior secured notes	$	150,000		$	—
Convertible notes		—			18,495
Debt discount		(7,020	)		(4,823	)
Westmoreland Mining, LLC:
Revolving line of credit		—			1,500
Term debt		120,000			125,000
Capital lease obligations		15,163			18,407
Other term debt		2,172			2,556
Westmoreland Resources, Inc.:
Revolving line of credit		—			16,900
Term debt		—			9,600
Capital lease obligations		6,145			7,821
ROVA:
Term debt		—			46,220
Debt premiums		—			428
Total debt outstanding		286,460			242,104
Less current portion		(19,796	)		(14,973	)
Total debt outstanding, less current portion	$	266,664		$	227,131

The following table presents aggregate contractual debt maturities of all long-term debt and the lines of credit at September 30, 2011 (in thousands):

Remainder of 2011	$	4,347
2012		21,639
2013		24,944
2014		22,630
2015		21,910
Thereafter		198,010
Total		293,480
Less: debt discount		(7,020	)
Total debt	$	286,460

Corporate

On February 4, 2011 through a private placement offering, the Company issued $150.0 million of Parent Notes, which are senior secured notes. The Company’s subsidiary, Westmoreland Partners, was a co-issuer of the notes. The Parent Notes were issued at a 5% discount, mature February 18, 2018, and bear a fixed interest rate of 10.750%, payable semi-annually, in arrears, on February 1 and August 1 of each year which began August 1, 2011. Substantially all of the assets of the Parent, ROVA and WRI constitute collateral for the Parent Notes as to which the holders of these notes have a first priority lien. Under the indenture governing the Parent Notes, the Company is required to offer a portion of its Excess Cash Flow (as defined by the indenture) for each fiscal year to purchase some of these notes at 100% of the principal amount.

As a result of this offering, the Company recorded a $17.0 million loss on extinguishment of debt in the nine months ended September 30, 2011. The loss included a $9.1 million make-whole payment for ROVA’s debt and $7.9 million of non-cash write-offs of unamortized discount on debt and related capitalized debt costs and convertible debt conversion expense.

The indenture governing the Parent Notes contains, among other provisions, events of default and various affirmative and negative covenants. As of September 30, 2011, the Company was in compliance with all covenants.

Westmoreland Mining LLC

WML has outstanding $120.0 million in term debt as of September 30, 2011 and is party to a revolving credit facility with a maximum availability of $25.0 million. In the nine months ended September 30, 2011, WML repaid $5.0 million on its term debt and $4.0 million of its capital lease obligations and other term debt. WML entered into capital lease agreements in the amount of $0.4 million during the nine months ended September 30, 2011. The weighted average interest rate for WML’s capital leases and other term debt was 8.01% and 6.18%, respectively, at September 30, 2011.

The available balance on the $25.0 million revolving line of credit at September 30, 2011 was $23.1 million. The revolving line of credit supports a $1.9 million letter of credit, which reduces the available balance. The interest rate on the revolving line of credit was 3.75% at September 30, 2011.

WML’s lending arrangements contain, among other provisions, events of default and various affirmative and negative covenants. As of September 30, 2011, WML was in compliance with all covenants.

Westmoreland Resources, Inc.

In February 2011, proceeds from the Parent Note offering were used to pay off the outstanding balance of WRI’s term debt and revolving line of credit. In addition, WRI’s revolving line of credit was terminated in February 2011.

In the nine months ended September 30, 2011, WRI repaid $1.8 million of its capital lease obligations. WRI entered into capital lease agreements in the amount of $0.1 million during the nine months ended September 30, 2011. The weighted average interest rate for WRI’s capital leases was 6.72% at September 30, 2011.

ROVA

In February 2011, proceeds from the Parent Note offering were used to repay all of ROVA’s outstanding fixed rate term debt. In addition, ROVA’s revolving line of credit was terminated in February 2011.

Convertible Debt

In February 2011, the outstanding balance of the Company’s convertible notes was eliminated, with $2.5 million paid to retire a portion of the convertible notes and the remainder of the notes being converted into 1,877,946 shares of Company common stock at a conversion price of $8.50 per share.