TSX: WTN & WTN.DB and AIM: WTN
VANCOUVER, Sept. 18 /CNW/ - Western Canadian Coal Corp. (TSX: WTN &
WTN.DB and AIM: WTN) (the "Company") announces that it has come to terms with
the banking syndicate, led by BNP Paribas, to restructure the credit facility
(the "BNP Loan") made between the banking syndicate and the Company's
wholly-owned subsidiary, Wolverine Coal Ltd.
In consideration of the covenants within the BNP Loan being set at
targets in line with the revised operating plans of the Company and certain
other requirements imposed by the banking syndicate, the Company has reduced
the outstanding principal under the BNP Loan from $55 million to $35 million.
In addition to the reduction of the BNP Loan principal, the Company is
required to raise additional capital in the amount of $5 million, to replace
the liquidity impacted by the lack of access to the Asset Backed Commercial
Papers held by the Company. The restructuring of the covenants within the BNP
Loan will provide the Company with the flexibility to maintain the momentum at
Wolverine and increase the time and management resources for developing the
With respect to the requirement to raise additional capital the Company
is pleased to announce that it's major shareholder, Cambrian Mining plc,
("Cambrian") has agreed to make available a short term loan facility of $5
million (the "Loan"). The Loan will provide the Company with the additional
liquidity required by the banking syndicate. Under the terms of the Loan, the
principal amount of $5 million is available immediately upon execution of the
Loan and is secured against the Asset Backed Commercial Papers held by the
Company. The Company shall pay a fee of $100,000 plus the interest on the
Loan, which shall accrue at the rate of 8% per annum payable upon repayment of
the principal. The Loan is intended to be repaid by July 31, 2008 or earlier
in certain circumstances, however, if payment is not made by July 31, 2008,
the interest payable shall accrue at the rate of 12% per annum thereafter
until July 15, 2011. A further fee of $125,000 will be due on August 1, 2008.
The Company may make prepayment at any time.
Additionally, Cambrian, subject to the Company obtaining the necessary
regulatory approvals has the right to convert any unpaid principal amount of
the Loan and any accrued interest into common shares of the Company at any
time prior to July 15, 2011, at a price of $2.35 per share. Subject to the
Company obtaining the necessary regulatory approvals, the Company will also
issue to Cambrian 520,000 warrants to purchase common shares in the Company at
an exercise price of $3.25 per share at any time prior 5:00 pm (Vancouver
time) on September 30, 2008.
Mr. John Hogg, President and Chief Executive Officer of the Company,
stated that the assistance by Cambrian in supporting the prepayment of
significant bank debt and replacing liquidity impacted by the loss of access
to the Commercial Paper is evidence of Cambrian's continuing support and
confidence in the development of the Company.
Cambrian and its wholly-owned subsidiary, Deepgreen Minerals Corporation
Ltd. currently hold approximately 48.3 million shares representing 41.7% of
the issued shares of the Company, as well as warrants to purchase a further
612,500 common shares of the Company. In addition Mr. John Byrne, Chairman of
the Company, is also a Director and Chairman of Cambrian and Mr. John Conlon,
a director of the Company is also a director of Cambrian.
As Cambrian is a substantial shareholder of the Company, the provision of
the Loan to the Company is deemed to be a related party transaction under
Canadian securities laws and under AIM rules. The directors of the Company,
other than Messrs. Byrne and Conlon, having consulted with the Company's
nominated advisor consider that the terms of the Loan are substantially
similar to what could be obtained from an arm's length party and that the
transaction is fair and reasonable in so far as the shareholders of the
Company are concerned.
Mr. Hogg also announced that the Company and Cambrian have entered into
discussions on coal marketing and other strategic synergy opportunities that
may be beneficial to both Companies as well as management support from
Cambrian to the Company.
The coal marketing synergies, including cost savings on marketing
initiatives and product mix that could be achieved through the combined
marketing of the Company's coal with coal from the Cambrian group, including,
Willow Creek, Coal International plc's production in West Virginia, USA and
Wales will be examined.
This release may contain forward-looking statements that may involve
risks and uncertainties. Such statements relate to the Company's expectations,
intentions, plans and beliefs. As a result, actual future events or results
could differ materially from those suggested by the forward-looking
statements. Readers are referred to the documents filed by the Company on
SEDAR. Such risk factors include, but are not limited to, changes in commodity
prices; strengths of various economies; the effects of competition and pricing
pressures; the oversupply of, or lack of demand for, the Company's products;
currency and interest rate fluctuations; various events which could disrupt
operations; the Company's ability to obtain additional funding on favourable
terms, if at all; and the Company's ability to anticipate and manage the
foregoing factors and risks. Additionally, statements related to the quantity
or magnitude of coal deposits are deemed to be forward-looking statements. The
reliability of such information is affected by, among other things,
uncertainties involving geology of coal deposits; uncertainties of estimates
of their size or composition; uncertainties of projections related to costs of
production; the possibilities in delays in mining activities; changes in plans
with respect to exploration, development projects or capital expenditures; and
various other risks including those related to health, safety and
WESTERN CANADIAN COAL CORP.
"John W. Hogg"
President and Chief Executive Officer
For further information:
For further information: John W. Hogg, President & CEO or Greg Jones,
Corporate Secretary, Western Canadian Coal Corp., 900 - 580 Hornby Street,
Vancouver, B.C. V6C 3B6 CANADA, Phone (604) 608-2692, Fax (604) 629-0075,
Email email@example.com, www.westerncoal.com