CHARLESTON, W.Va. (AP) - International Coal Group said Thursday
it's expanding a previously announced convertible debt offering to
as much as $225 million.
Most of the proceeds will be used to pay down a $325 million
credit line, ICG said in a document filed with the Securities and
Exchange Commission. Proceeds from the debt sale also will be used
to repay a $25 million loan from funds affiliated with Chairman
Wilbur Ross' company, W.L. Ross & Co., ICG's largest shareholder.
"It gives us financial flexibility," ICG spokesman Ira Gamm
said. "That's the key."
Originally, ICG planned to issue as much as $207 million in new
debt. That was Tuesday.
By Thursday, the company had expanded the offering to the new
figure and announced amendments to its senior credit facility.
ICG is blaming poor financial results in the first half of the
year for the financial maneuvering. ICG has lost $18.3 million so
far this year, compared with losses of $6.8 million in the first
half of 2006.
The poor showing this year raised concerns about violating
covenants of a $325 million senior credit line, ICG said. And it
threatened to constrain three development projects, according to
the SEC filing.
One, the ICG Beckley complex in Raleigh County, shipped its
first train of coal June 16 and is expected to produce 1.3 million
tons of metallurgical coal a year at full capacity. A second, the
Sentinel-Clarion mine in Barbour County, is already in production,
but has been hampered by construction problems. Major construction
of the third, the Tygart No. 1 mine in Taylor County, isn't
expected to start until next year.
By paying off the credit line and getting concessions from the
lenders behind it, ICG says it will have enough capital for the
rest of the year.
As of June 30, ICG had nearly $250 million in long-term debt and
capital leases and was down to $16.5 million in cash. The debt
offering will give the company about $100.5 million in cash and
$78.8 million of available debt on its senior credit line, ICG
ICG controls approximately 1.1 billion tons of coal reserves and
operates mining complexes in West Virginia, Kentucky, Maryland and
Illinois. Its stock fell 19 cents, or 4.5 percent, to $4.02
(Copyright 2007 by The Associated Press. All Rights Reserved.)