Westmoreland Signs Interim
Agreement with Benefit Funds
Colorado Springs, CO -- August 28, 1996 -- Westmoreland Coal Company (NYSE:WCX)
announced today that on August 21, 1996 it reached further interim agreements
with the trustees of the United Mine Workers of America ("UMWA") Combined
Benefit Fund ("Combined Fund") and the 1992 UMWA Benefits Plan ("1992 Plan").
The Company is seeking to defer premiums and post non-cash security in order
to preserve cash for implementation of its acquisition strategy.
Under The Coal Industry Retiree Health Benefit Act of 1992, a Federal law,
the Company is required to provide postretirement medical benefits for UMWA
miners and includes making premium contributions into these two benefit
plans. The Combined Fund is a multiemployer plan which benefits miners who
retired before January 1, 1976, or who retired after that date but whose last
employer did not provide benefits through an individual employer plan
("IEP"), some of the so-called industry "orphans". Westmoreland's current
annual premium to the Combined Fund is approximately $5 million, due in
monthly installments.
The 1992 Plan benefits miners who were eligible to retire between
January 1, 1976 and February 2, 1993 and did so on or before
September 30, 1994. The 1992 Plan also covers miners whose former employer
goes out of business and no longer has an IEP, and new qualified beneficiaries
who would have been eligible under the Combined Plan had that Plan not been
closed to new beneficiaries as of July 20, 1992. The 1992 Plan requires
posting of security for future benefits under the Act. In Westmoreland's
case that obligation is approximately $21 million at this time.
On July 9, 1996 an interim agreement was reached with Combined Fund whereby
Westmoreland is making required monthly beneficiary payments into an escrow
account as a precondition for further negotiations regarding a long term
deferral of premiums. Escrowed funds will be available to the Company for
acquisitions under certain conditions during the term of the interim
agreement. The Company hopes to finalize a non-cash long term arrangement
prior to the November 14, 1996 expiration of the interim agreement.
In a companion agreement signed on August 21, 1996 Westmoreland pledged
its stock in its affiliates Westmoreland Energy, Inc., Westmoreland
Resources, Inc., and Westmoreland Coal Sales Company, in place of cash
security requirements and certain cash premium payments. The pledge
agreement secures the Company's future obligations to the 1992 Plan.
The pledge of stock also secures Combined Fund premiums to be paid into
the escrow account to the extent cash is withdrawn for acquisition and
other purposes as well as retroactive premiums for additional assigned
beneficiaries expected to be assessed this fall.
Christopher K. Seglem, Westmoreland Coal Company's Chairman, President and
CEO said, "We have entered into these agreements with the Benefit Funds in
the hope they will lead to a long term deferral of cash premiums and
acceptance of non-cash security so that available cash can be invested in
profitable new businesses. We are aggressively seeking to acquire such
businesses which, in combination with our tax loss carryforwards, can
generate the cash flows necessary to make up deferrals, meet our future
benefit premium obligations, and return value to our shareholders. In order
to accomplish this, we must conserve and reinvest the cash available,
and cooperation of the Benefit Funds is critical to reaching our goal."
For further information contact Diane Jones (719) 448-5814.
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