VANCOUVER, Oct. 28, 2015 /CNW/ - Westshore Terminals Investment Corporation (TSX: WTE) (the "Corporation" or "Westshore" ) announced today that it has filed with the Canadian security regulatory authorities its earnings report for the third quarter ended September 30, 2015, and related management's discussion and analysis. Copies of the documents are available on SEDAR at www.sedar.com and the Corporation's website at www.westshore.com.
Due to extended depressed product pricing in the export market for thermal coal, Cloud Peak Energy Logistics LLC ("CPE") has advised Westshore that it will be necessary to curtail sales to the export market for the 2016-2018 period, while maintaining its substantial US domestic sales. Under its agreement with CPE, Westshore is entitled to financial compensation in lieu of tonnage shipped. As a result, Westshore has agreed with CPE that for 2016 - 2018 CPE's volume commitments to Westshore will be eliminated in exchange for a series of defined payments. The first of those payments have been made, with the balance of payments to be made on a quarterly basis in the 2016 - 2018 period.
Should CPE decide to ship coal to the export market in the 2016 - 2018 period it is obligated to do so through Westshore under the terms and conditions (including throughput charges) to be agreed at the time of the particular shipment(s). From 2019 to 2024, CPE's agreement with Westshore (as it exists today) becomes fully reinstated.
Consequently, Westshore's 2016 throughput volumes are now anticipated to be approximately 26 million tonnes (rather than the approximately 30 million tonnes previously anticipated). While foregoing some of the revenue anticipated from the CPE contract over this period, Westshore's financial performance will benefit from the compensation payments from CPE, and cost reductions flowing from reduced tonnage which Westshore will implement at the terminal.
Westshore's agreements with its customers are fundamental to maximizing its operations, and to reinvest in the terminal for the long term – including for the payment of the current $270 million capital project. In recognition of the reduction in CPE's volumes, Westshore's board has determined to continue its policy of incurring minimal debt financing for the capital project. Accordingly, the dividend will be reduced from the current $0.33 per share per quarter, to $0.25 per share per quarter commencing with the fourth quarter of 2015. The board will continue to review the dividend policy on a regular basis.
Forward-looking information included in this document includes statements with respect to future revenues, expected loading rates, strength of markets for metallurgical and thermal coal, expected throughput volumes, future throughput capacity, the effect of Canadian/U.S. dollar exchange rate, the future cost of post-retirement benefits, cost of and timing to complete capital projects and the anticipated level of dividends.
Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at which, such performance or results will be achieved. There is significant risk that estimates, predictions, forecasts, conclusions and projections will not prove to be accurate, that assumptions may not be correct and that actual results may differ materially from such estimates, predictions, forecasts, conclusions or projections.
SOURCE Westshore Terminals Investment Corporation
For further information: Nick Desmarais, Secretary & Vice-President of Corporate Development, (604) 488-5214