TSX: WTN, WTN.DB and AIM: WTN
VANCOUVER, Nov. 22 /CNW/ - Western Canadian Coal Corp (TSX: WTN and
WTN.DB and AIM: WTN) ("Western" or "Company") is pleased to announce that it
has entered into an agreement with Audley European Opportunities Fund
("Audley") to issue by way of private placement senior convertible debentures
in the aggregate principal amount of the equivalent of a minimum of
C$30 million, and a maximum of C$40 million (denominated in US dollars) to a
group of investors led by Audley.
Proceeds of the issue will be used for working capital requirements at
the Company's Wolverine coal mine, to reduce the current level of the
principal and interest due under its existing bank debt, and for general
The Company is confident about the prospects of the Wolverine Mine and
expects productivity and costs to improve over the coming months as a result
of new leadership at the mine, improved planning and maintenance procedures
which have recently been introduced and the recent investment in new mining
equipment. As well as this improvement in operational practices, the Company
also is optimistic that it will be able to secure long-term sales contracts
with key customers in the immediate future.
The Company also intends to conclude an agreement by the end of the year
with its major shareholder, Cambrian Mining plc, to acquire Falls Mountain
Coal Corp. which will significantly improve the Company's reserves of coal and
will provide the potential to accelerate production and reduce costs from its
Brule Mine in the medium and long-term.
"This investment provides the Company with sufficient financing well into
the new coal year when the higher coal prices are anticipated," said John W.
Hogg, President and Chief Executive Officer of Western Canadian Coal Corp. "We
can now focus our efforts on increasing production and lowering costs with a
view to delivering shareholder value."
Mr. Julian Treger of Audley added, "We are happy to support Western
Canadian Coal with this investment. We are excited about the prospects that
Western Canadian Coal has before it; a buoyant metallurgical coal market and a
strong customer base of major steel mills in Europe and Asia. With increased
production capability, high quality assets and significant levels of reserves
we would expect substantially improved profitability in 2008. We have made
this significant investment to ensure the Company would be well capitalized to
take advantage of these opportunities."
The convertible debentures will bear interest at 8.5% per year, payable
semi-annually beginning May 31, 2008, will mature three years from the closing
date, and are convertible into common shares of the Company at any time prior
to their expiry at a conversion price equal to C$0.75 per share subject to
customary anti-dilution adjustments. This represents a premium of
approximately 15% over yesterday's closing price for the common shares on the
Toronto Stock Exchange ("TSX") of $0.65 per share. The convertible debentures
are not redeemable by Western prior to maturity. The private placement is
scheduled to close on or about November 30, 2007 and is subject to the
satisfaction of a number of closing conditions including the receipt of TSX
approvals and compliance with certain London Stock Exchange AIM Rules. As
compensation for its efforts in leading this financing, at the closing of the
private placement Western will issue to Audley warrants to purchase an
aggregate up to 4.24 million common shares at a price of C$0.75 per share.
These warrants will be exercisable for a period of three years from closing.
Assuming full conversion of the $40 million of debentures and the
exercise of Audley's warrants, an aggregate of 57,573,333 common shares of the
Company will be issued (representing approximately 49.6% of the total number
of 115,991,240 common shares currently outstanding in the Company) which will
result, following conversion, in a total number of issued common shares
outstanding in the Company of 173,564,573. At that point, Audley would hold
44,240,000 common shares, (which represents 38.1% of the total number of
currently outstanding common shares in the Company), which would represent
approximately 25.5% of the total number of common shares outstanding in the
Company following conversion. Post closing of the private placement, one
representative from Audley will be appointed to the Company's Board of
As announced on November 15, 2007, Western currently does not have
sufficient funds to meet its near term financial obligations, including the
requirement under the terms of a waiver agreement related to the Company's
credit facilities to raise additional equity capital of at least $15 million
no later than November 30, 2007. The Company now believes this issue will
allow the Company to meet those obligations.
As a result of the foregoing, the Company has applied to the TSX for an
exemption under section 604 (e) of the TSX Company Manual from any shareholder
approval requirement that would have otherwise applied to the private
placement. The TSX has advised the Company that, as a result of this
application and in accordance with standard TSX procedures, it will review the
eligibility of the Company for continued listing on the TSX. The Company is
confident that the completion of the private placement will enable the Company
to satisfy the TSX's ongoing listing requirements.
A committee of independent directors of the Board of Directors of the
Company on behalf of the Board has reviewed the terms of the transaction and
determined that the private placement is in the best interests of the Company
and reasonable in the circumstances.
About Audley Capital
Audley is an investment fund advised by Audley Capital Advisors LLP,
which holds approximately 29% of the common shares of Cambrian Mining plc.
Cambrian, together with its wholly-owned subsidiary, Deepgreen Minerals
Corporation Ltd. of Melbourne, Australia, currently hold approximately 48.4
million common shares of Western, representing approximately 42% of Western's
current issued and outstanding shares. Mr. John Byrne, Chairman of Western, is
also Chairman of Cambrian and holds approximately 7.2% of the outstanding
shares of Cambrian. Mr. John Conlon, a director of Western, is also a director
of Cambrian and holds approximately 1.0% of the outstanding shares of
Cambrian. As a result of this private placement and assuming full conversion
of the $40 million in debentures and the exercise of Audley's warrants,
Cambrian's interests in Western would be approximately 27.9%.
About Western Canadian Coal
Western Canadian Coal Corp. produces 3.4 million tonnes of high quality
metallurgical coal from two mines located in the northeast of British
Columbia. The Company also has interests in various coal properties in
northern and southern British Columbia and a 50% interest in the Belcourt
Saxon Limited Partnership, which was formed to explore and develop the
Belcourt and Saxon group of properties in northern BC. Currently, these
properties provide the Company with an estimated 25 years of coal reserves.
The information in this news release contains certain forward-looking
statements that involve substantial known and unknown risks and uncertainties,
which are beyond Western's control, including the price of coal, risks
relating to the exploration and development of coal deposits, and other risk
factors outlined in Western's Annual Information Form available on SEDAR at
www.sedar.com. Western's actual results and performance could differ
materially from those expressed in, or implied by, such forward-looking
statements and, accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or occur or, if
any of them do, what benefits Western will derive from them.
This press release is neither an offer to purchase securities nor a
solicitation of an offer to sell securities.
For further information:
For further information: David Jan, Manager of Investor Relations &
Corporate Development, (604) 608-2692, firstname.lastname@example.org