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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 1999
ANKER COAL GROUP, INC.
(Exact Name Of Registrant As Specified in Its Charter)
Delaware 333-39643 52-1990183
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
2708 Cranberry Square 26508
Morgantown, West Virginia (Zip Code)
(Address Of Principal Executive Offices)
Registrant's telephone number, including area code: (304) 594-1616
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ANKER COAL GROUP, INC.
FORM 8-K
TABLE OF CONTENTS
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ITEM 5. OTHER EVENTS ................................................... 1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS .............................. 1
SIGNATURE PAGE ......................................................... 2
EXHIBIT INDEX .......................................................... 3
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ITEM 5. OTHER EVENTS
Anker Coal Group, Inc. (the "Company") issued the attached press
release on October 28, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release dated October 28, 1999
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANKER COAL GROUP, INC.
/s/ Bruce Sparks
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Bruce Sparks
President
Date: October 28, 1999
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FOR IMMEDIATE RELEASE
October 28, 1999
ANKER COAL ANNOUNCES COMPLETION OF
PRIVATE RESTRUCTURING AND FINANCING TRANSACTIONS
Morgantown, WV -- Anker Coal Group, Inc. ("Anker") announced today that
it has completed a private restructuring of its 9-3/4% Senior Notes due 2007
("Old Notes") and a private placement to raise additional capital. Anker's
President, Bruce Sparks, said "the restructuring of Anker's Old Notes, the
private placement to raise additional capital and the successful transition from
company operated underground mines to contractor operated mines provides the
foundation for Anker's future performance. By completing the restructuring
transactions, Anker's management can now turn its full attention to improving
Anker's operating and financial performance and implementing its future growth."
Mr. Sparks added that "Anker appreciates the leadership provided by Rothschild
Recovery Fund in the financial restructuring transactions and its support of the
Company."
In the transactions, a limited number of qualified noteholders
exchanged $108.5 million of their Old Notes for $86.8 million of 14.25% Series A
Second Priority Senior Secured Notes due 2007 (PIK through April 1, 2000) ("New
Secured Notes"). Exchanging noteholders also received warrants to purchase an
aggregate of 20% of Anker's common stock at a nominal exercise price.
Approximately 86.8% of the Old Notes were exchanged, and approximately $16.5
million of the Old Notes remain outstanding. In connection with the private
exchange, the exchanging holders consented to amendments to the indenture for
the Old Notes that, among other things, modify or eliminate various covenants.
Anker also announced that it paid the October 1, 1999 cash interest payment on
the remaining Old Notes on October 28, 1999 before the expiration of the grace
period for that interest payment.
In connection with the restructuring transactions, Anker raised $11.2
million in cash through the sale to Rothschild Recovery Fund, one of the
exchanging holders, in a private placement of $13.2 million principal amount of
New Secured Notes and warrants to purchase 10% of Anker's common stock at a
nominal exercise price.
Anker also issued $6 million of New Secured Notes to a shareholder of
Anker controlled by the estate of John J. Faltis, the former Chairman and Chief
Executive Officer of Anker, in exchange for cancellation of that shareholder's
Anker stock and its rights to require Anker to buy that stock for approximately
$10.5 million.
In connection with the closing, Foothill Capital Corporation, the
Company's senior secured lender, consented to the restructuring transactions and
waived existing events of default under its loan agreement with the Company.
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In connection with updating its disclosures for purposes of completing
these transactions, Anker advised the participants in the private transactions
of the following matters:
- - The West Virginia Division of Environmental Protection ("WVDEP") has
indicated by letter to Anker that it anticipates a favorable consideration
of Anker's application for a mining permit for its Grant County, West
Virginia surface mine. However, because Anker did not receive the permit by
October 15, 1999, Virginia Electric Power Company ("VEPCO") has the right
to terminate its contract to purchase coal from Anker. Nevertheless, VEPCO
has indicated by letter to Anker that, in view of the progress being made
in obtaining the permit, VEPCO anticipates that it will not terminate its
contract as long as Anker receives the permit in the near term.
- - On October 21, 1999, Anker's borrowing availability under the revolving
credit facility with Foothill Capital Corporation was $3.7 million (not
including the $2.0 million of undrawn interim additional liquidity that
expires on November 2, 1999). It should be noted that the $11.2 million in
additional capital raised in the private placement will be applied against
the revolver, thereby creating substantial additional availability for the
Company.
- - Anker has revised its estimate of the alternative minimum tax liability
that will arise with respect to the cancellation of debt income that may
result from the private exchange transaction. As recalculated, Anker
estimates that the alternative minimum tax liability could be as much as $7
million. It should be noted that Anker's estimate is subject to
uncertainty, and the actual tax liability may be less than this amount.
- - Anker has determined that the New Secured Notes will be subject to the
deductibility limitations applicable to high yield debt. As a result, Anker
anticipates that it will be unable to deduct a significant portion of the
interest payments made on the New Secured Notes against future income from
operations. The Projected Summary Financial Statements filed as an exhibit
to the Current Report on Form 8-K, filed with the SEC on October 1, 1999 do
not contemplate the payment of any Federal income tax by Anker during the
periods reflected in such statements. Because of the limitation on the
deductibility of interest paid on high yield debt, Anker may have taxable
income and, therefore, may be required to pay Federal income tax during
such periods.
Anker Coal Group, Inc. and its subsidiaries produce and sell
coal used principally for electric generation and steel production in the
eastern United States.
The securities issued as described above have not been
registered under the Securities Act of 1933 and may not be offered and sold in
the United States absent registration or an applicable exemption from
registration. The above is not and shall not be deemed to constitute an offer
to sell or the solicitation of an offer to buy any security.
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This release contains statements that constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, including
Anker's ability to implement its business plan, the availability of liquidity
and capital resources, the effects of the transition to contract mining, the
ability to achieve anticipated costs savings, securing new mining permits,
unforeseen adverse geologic conditions and other factors identified in Anker's
filings with the SEC. Actual results may differ materially from those described
or implied herein as a result of various factors, many of which are beyond
Anker's control.
Contact Bruce Sparks, President, Anker Coal Group, Inc. at
(304) 594-1616.
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