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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): August 27, 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 File (I.R.S. Employer
incorporation or organization) 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
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. issued the attached press release on August 27,
1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Amendment No. 2 to Loan Documents dated as of August 26, 1999,
amending the Loan and Security Agreement, dated as of November
21, 1999, by and among certain Subsidiaries of Anker Coal
Group, Inc. (the "Borrowers"), certain financial institutions
party thereto (the "Lenders") and Foothill Capital
Corporation, as agent (the "Agent").
99.2 Press Release dated August 27, 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/ P. Bruce Sparks
-----------------------
P. Bruce Sparks
President
Date: August 27, 1999
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Draft: August 25, 1999
FOR DISCUSSION PURPOSES
AMENDMENT NO. 2 TO LOAN DOCUMENTS
August __, 1999
Foothill Capital Corporation
11111 Santa Monica Boulevard
Suite 1500
Los Angeles, California 90025
Gentlemen:
Foothill Capital Corporation, as agent ("Agent"), the financial
institutions party to the Loan Agreement referred to herein (each, individually
a "Lender" and collectively, "Lenders") and certain Subsidiaries of Anker Coal
Group, Inc. (each, individually, a "Borrower" and collectively "Borrowers") have
entered into certain financing arrangements as set forth in the Loan and
Security Agreement, dated as of November 21, 1998, by and among Borrowers,
Lenders and Agent, as amended by Amendment No. 1 to Loan Documents, dated August
4, 1999, by and among Borrowers, Guarantors, Lenders and Agent (as the same may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement"), and all other agreements, documents
and instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto, including, but not limited to, this
Amendment (as all of the foregoing now exist, are modified hereby or are
hereafter amended, modified, supplemented, extended, renewed, restated or
replaced, collectively, the "Loan Documents").
Borrowers have requested that Agent and Lenders (a) re-apply
retroactively to the Advances, to the date of receipt thereof, the Coastal
Payments ( as defined below) previously applied to the unpaid balance of the
Term Loan, (b) make certain Advances to Borrower, for a limited period of time,
in excess of the Borrowing Base, and (c) amend certain other provisions of the
Loan Agreement in connection therewith, and Agent and Lenders are willing to
consent to all of the foregoing, subject to the terms and conditions contained
in this Amendment No. 2 to Loan Documents (this "Amendment").
In consideration of the foregoing and the respective agreements and
covenants herein, the receipt and adequacy of which consideration is hereby
acknowledged, the parties hereto agree as follows:
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1. Definitions.
(a) Additional Definitions. As used herein, the following terms
shall have the respective meanings given to them below and the Loan Agreement
shall be deemed and is hereby amended to include, in addition and not in
limitation, each of the following definitions:
(i.) "Temporary Overadvance Limit" shall mean (A) $2,000,000
for the period from and after the effective date of this Amendment through and
including November 1, 1999, and (B) zero on the opening of business on Tuesday,
November 2, 1999, and all times thereafter.
(ii.) "Temporary Overadvances" shall mean the Advances
hereafter made by each Lender to or for the benefit of Borrowers' Agent on
behalf of Borrowers on a revolving basis (consisting of advances, repayments and
readvances) as set forth in Section 2 of this Amendment.
(iii.) "Temporary Overadvances Termination Date" shall mean
November 2, 1999.
(b) Amendment to Definition. All references to the term "Advances"
in the Loan Agreement shall be deemed and each such reference is hereby amended
to include, in addition and not in limitation, the Temporary Overadvances.
2. Temporary Overadvances.
(a) Making of Temporary Overadvances. In addition to the Advances
which may be made by Agent and Lenders to Borrowers' Agent on behalf of
Borrowers pursuant to Section 2.1 of the Loan Agreement (including, without
limitation, pursuant to Section 2.1(k) thereof), upon the request of Borrowers'
Agent, made at any time and from time to time prior to the Temporary Overadvance
Termination Date, subject to the terms and conditions contained herein, in the
Loan Agreement and in the other Loan Documents, each Lender shall make Temporary
Overadvances to Borrowers' Agent in amounts in excess of the amounts otherwise
available to Borrowers under Section 2.1 of the Loan Agreement (as calculated by
the Agent, and subject to the sublimits provided for in the Loan Agreement and
reserves established by Agent, if any, pursuant to Section 2.1(b) of the Loan
Agreement) up to the aggregate amount not to exceed such Lender's Pro Rata Share
of an amount equal to the Temporary Overadvance Limit as then in effect.
(b) Temporary Overadvance Limit; Collateral. Except in the
Required Lenders' discretion, Borrowers shall have no right to receive, and
Lenders shall not make, any Temporary Overadvances in excess of the Temporary
Overadvance Limit as then in effect or at any time
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after the Temporary Overadvance Termination Date. The Temporary Overadvances
shall be secured by all Collateral.
(c) Payment in Full on Temporary Overadvance Termination Date.
Unless sooner demanded by the Agent in accordance with the terms of the Loan
Agreement or the other Loan Documents, or otherwise due as provided above, all
outstanding and unpaid Obligations arising pursuant to the Temporary
Overadvances (including, but not limited to, principal, interests, fees, costs,
expenses and other charges in respect thereof payable by Borrowers to Agent)
shall automatically, without notice or demand, be absolutely and unconditionally
due and payable and Borrowers shall pay to Agent for the account of Lenders in
cash or other immediately available funds all such Obligations on the Temporary
Overadvance Termination Date.
(d) Additional Event of Default. Each Borrower acknowledges and
agrees that, notwithstanding anything to the contrary contained in the Loan
Agreement or the other Financing Agreements, the failure of Borrowers to pay
such Obligations arising pursuant to the Temporary Overadvances in accordance
with the terms of Section 2(c) shall constitute an Event of Default.
(e) Letters of Credit. In the event that any Letters of Credit
shall have been issued pursuant hereto which are permitted to be issued only as
part of the Temporary Overadvances, then all such Letters of Credit shall have
expired or been drawn upon in full no later than the Temporary Overadvance
Termination Date. In the event that, at the close of business on the Temporary
Overadvance Termination Date, the aggregate amount of Advances under Section
2.1(a) of the Loan Agreement would exceed the amount permitted to be outstanding
thereunder, as a result of any outstanding Letters of Credit issued for the
account of Borrowers as part of the Temporary Overadvances, then, not later than
the close of business on such day, Borrowers shall repay that portion of the
Temporary Overadvances in an amount equal to the aggregate amount of such excess
amount.
3. Interest on Temporary Overadvances. Notwithstanding anything to the
contrary contained in Section 2.6 of the Loan Agreement, all Temporary
Overadvances shall bear interest at a per annum rate of (a) prior to the
occurrence and continuance of an Event of Default, four percentage points (4%)
above the Reference Rate and (b) upon the occurrence and during the continuation
of an Event of Default, other than the Existing Defaults (as defined below), at
a per annum rate of six percentage points (6%) above the Reference Rate.
4. Coastal Payments. Pursuant to that certain Letter re: Consent to
Transactions with Coastal Coal - West Virginia, LLC, dated July 1, 1999,
executed by and among Borrowers, Guarantors, and Agent (the "Coastal Consent"),
Coastal Payments (as defined in the Coastal Consent) in the amount of $1,250,000
were remitted to the Agent and were applied as proceeds
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of a Permitted Supplemental Disposition to the unpaid principal balance of the
Term Loan. Borrowers, Guarantors and Lenders hereby acknowledge, confirm and
agree that, notwithstanding anything to the contrary contained in the Coastal
Consent or in the Loan Agreement, (a) all Coastal Payments are hereby deemed and
shall constitute, for all purposes of the Loan Agreement and the other Loan
Documents, proceeds of a Permitted Supplemental Disposition that have been
applied by the Agent, effective as of the date of Agent's receipt thereof (the
"Receipt Date"), to the then outstanding Advances and the Agent shall make a
notation on its books to the effect that, all as of the Receipt Date, the
application of the Coastal Payments previously made to the Term Loan shall be
reversed, the unpaid principal balance of the Term Loan shall be thereby
increased by the amount of the Coastal Payments and the Coastal Payments shall
be applied in full to the then outstanding Advances, (b) after giving effect to
the re-application of the Coastal Payments provided for in clause (a)
immediately above, the unpaid principal balance of the Term Loan outstanding as
of the date hereof is $13,571,432 (collectively, the "Existing Term Loan") and
the Existing Term Loan is due and payable to Lenders in accordance with Section
2.3 of the Loan Agreement and the Term Note, together with interest accrued and
accruing thereon at the applicable rate set forth in Section 2.6 of the Loan
Agreement, without offset, defense or counterclaim of any kind or nature, and
(c) nothing contained herein shall in any manner be deemed to amend the Term
Loan payment provisions set forth in Section 2.3(a) of the Loan Agreement and in
the Term Note.
5. Temporary Overadvance Facility Fee. In consideration of Lender's
agreement to make the Temporary Overadvances to Borrowers on and subject to the
terms and conditions set forth in this Amendment, Borrower agrees to pay to
Agent, for the account of Lenders, a fee in the amount of $15,000, which fee is
earned and shall be paid in full as of the date of this Amendment and may be
charged, at Agent's option, to any account of Borrowers maintained by Agent.
6. Events of Default. Borrowers and Guarantors hereby acknowledge,
confirm and agree that (a) Borrowers did not have Excess Availability in an
amount in excess of $5,000,000 when Borrowers made certain Intercompany Loans to
Parent and Guarantors during the calendar month of July, 1999, (b) as a result
of Parent's certification to the Agent that Parent is not presently Solvent, as
set forth in Parent's Solvency Certificate, dated August 24, 1999, for Parent's
fiscal month ended July 30, 1999, a Material Adverse Change has occurred with
respect to Parent since the date of the latest financial statements submitted to
the Lender Group on or before the Closing Date, and Borrowers' representation
and warranty with respect thereto set forth in Section 5.11 of the Loan
Agreement is not true and correct, and (c) as a result of the foregoing, an
Event of Default has occurred and is continuing under, respectively, Section
8.2(c) and Section 8.12 of the Loan Agreement (collectively, the "Existing
Defaults"). Nothing contained in this Amendment shall in any manner be deemed to
waive the Existing Defaults or limit, impair or otherwise affect any of the
rights and remedies of the Agent and the Lenders with respect to the Existing
Defaults, all of which rights and remedies are hereby expressly reserved.
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7. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrowers to Lender Group pursuant to the Loan Documents, each Borrower
and each Guarantor hereby jointly and severally represents, warrants and
covenants with and to Lender Group as follows (which representation, warranties
and covenants are continuing and shall survive the execution and delivery hereof
and shall be incorporated into and made a part of the Loan Documents):
(a) Other than the Existing Defaults, no Default or Event of
Default exists as of the date of this Amendment after giving effect to the
amendments set forth herein.
(b) This Amendment has been duly executed and delivered by each
Borrower and each Guarantor, and the agreements and obligations of each Borrower
and each Guarantor contained herein constitute legal, valid and binding
obligations of Borrowers and Guarantors enforceable against each Borrower and
each Guarantor in accordance with their respective terms.
(c) Except as otherwise set forth in Section 6 of this Amendment,
all of the representations and warranties set forth in the Loan Agreement and
the other Loan Documents are true and correct in all material respects on and as
of the date hereof as if made on the date hereof, except to the extent any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such date.
8. Conditions Precedent. This Amendment shall be effective upon the
satisfaction of each of the following conditions precedent, as determined by
Agent:
(a) Agent shall have received an original of this Amendment, duly
authorized, executed and delivered by each Borrower, each Guarantor and each
Lender;
(b) Agent shall have received a duly executed Solvency Certificate
with respect to the month of July, 1999;
(c) In addition to, and not in limitation of, the documents that
Borrowers are required to deliver to Agent pursuant to Section 6.2(a) of the
Loan Agreement, Agent shall have received a calculation of the Borrowing Base as
of the effective date of this Amendment, in form and substance satisfactory to
Agent; and
(d) other than the Existing Defaults, no Default or Event of
Default shall have occurred and be continuing.
9. Miscellaneous.
(a) Headings. The headings listed herein are for convenience only
and do not constitute matters to be considered in interpreting this Amendment.
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(b) Effect of this Amendment. Except as modified pursuant hereto,
the Loan Documents are hereby specifically ratified, restated and confirmed by
all parties hereto as of the effective date hereof. To the extent of a conflict
between the terms of this Amendment and the other Loan Documents, the terms of
this Amendment shall control.
(c) Governing Law. The validity, interpretation and enforcement of
this Amendment shall be governed by the laws of the State of New York.
(d) Further Assurances. Borrowers and Guarantors shall execute and
deliver such additional documents and take such additional action as may be
necessary or desirable, as determined by Agent, to effectuate the provisions and
purposes of this Amendment.
(e) Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement.
Very truly yours,
ANKER ENERGY CORPORATION
By:_____________________________
Title:__________________________
MARINE COAL SALES COMPANY
By:_____________________________
Title:__________________________
ANKER WEST VIRGINIA MINING
COMPANY, INC.
By:_____________________________
Title:__________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
PATRIOT MINING COMPANY, INC.
By:_____________________________
Title:__________________________
VINDEX ENERGY CORPORATION
By:_____________________________
Title:__________________________
ANKER VIRGINIA MINING COMPANY, INC.
By:_____________________________
Title:__________________________
JULIANA MINING COMPANY, INC.
By:_____________________________
Title:__________________________
ANKER COAL GROUP, INC.,
as Guarantors' and Borrowers' Agent
By:_____________________________
Title:__________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
ANKER GROUP, INC.
By:_____________________________
Title:__________________________
SIMBA GROUP, INC.
By:_____________________________
Title:__________________________
ANKER POWER SERVICES, INC.
By:_____________________________
Title:__________________________
BRONCO MINING COMPANY, INC.
By:_____________________________
Title:__________________________
VANTRANS, INC.
By:_____________________________
Title:__________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
KING KNOB COAL CO., INC.
By:____________________________
Title:_________________________
HEATHER GLEN RESOURCES, INC.
By:____________________________
Title:_________________________
HAWTHORNE COAL COMPANY, INC.
By:____________________________
Title:_________________________
UPSHUR PROPERTY, INC.
By:____________________________
Title:_________________________
MELROSE COAL COMPANY, INC.
By:____________________________
Title:_________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
NEW ALLEGHENY LAND HOLDING
COMPANY, INC.
By:_____________________________
Title:__________________________
AGREED AND ACKNOWLEDGED:
FOOTHILL CAPITAL CORPORATION,
as Agent and as a Lender
By:__________________________
Title:_______________________
CONGRESS FINANCIAL CORPORATION
By:__________________________
Title:_______________________
SUNROCK CAPITAL CORP.
By:__________________________
Title:_______________________
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FOR IMMEDIATE RELEASE
August 27, 1999
Morgantown, WV - As reported in its recent Form 10-Q, Anker Coal Group,
Inc. (the "Company") has been seeking $3 million of short-term funding for its
operations pending completion of a planned restructuring of its senior notes and
infusion of additional capital as described in its Form 10-Q. The Company
announced today that it has entered into an amendment to the Foothill loan
agreement. Under the amendment, Foothill and the other lenders have agreed to
provide the Company with up to $3.25 million of additional liquidity, $2 million
of which must be repaid on or before November 2, 1999. This supplemental
liquidity will provide the Company with additional time to seek to implement the
planned restructuring. As part of the amendment, the Company acknowledged the
existence of certain Events of Default, including its inability in the absence
of the planned restructuring to certify that it can pay all of its debts as they
come due. Although Foothill and the other lenders were unwilling to formally
waive the Events of Default, the Company does not believe that they will take
any action on the Events of Default at this time.
Anker Coal Group, Inc. and its subsidiaries produce and sell coal used
principally for electric generation and steel production in the eastern United
States.
This release contains statements which 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 the Company'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 cost savings, securing new mining permits, unforeseen
adverse geologic conditions, successful completion of the planned restructuring
and receipt of additional capital, and other factors identified in the Company'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 the
control of the Company.
