Vancouver — In urgent need of dollars, Western Canadian Coal (WTN-T, WTN-L) has completed a $40-million financing to avert a cash crunch following its recent quarterly loss of almost $44 million.
The northeastern B.C. coal producer has inked an agreement with Audley European Opportunities Fund and issued $40 million in senior convertible debentures.
Proceeds are earmarked for the company’s growing working capital needs at its Wolverine coal mine and to pay down some of its existing bank debt.
The convertible debentures bear an 8.5% interest rate per year and are payable semi-annually starting May 31, 2008. They mature in three years and are convertible into shares at a price of 75 per share.
For leading the financing, Audley received warrants for the purchase of up to 4.24 million Western Canadian Coal shares at 75 apiece, exercisable for three years.
As many as 57.5 million shares could be issued as a result of the financing — assuming full conversion of $40 million in debentures and exercise of Audley’s warrants — with Audley owning up to 25.5% of Western Canadian Coal following the transaction.
Audley is an investment fund advised by Audley Capital Partners, which holds about 29% of Western Canadian Coal’s largest shareholder Cambrian Mining (CGIIF-O, CBM-L).
Cambrian holds about 48.4 million Western Canadian Coal shares, or 41.7% of the company.
Shares of the junior coal producer have bounced off the multi-year low of 47, following its recent quarterly results, to trade in the 60-70 range. Based on its 116 million shares outstanding, it posts a $75-million market capitalization.
With the financing under its belt, Western Canadian Coal says now is an “opportune time to review strategic alternatives,” which may include new alliances, refinancings, mergers, acquisitions or even a sale of part or all of its business.
To support this effort, the company is forming a new steering committee comprised of independent directors and principal investors.
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