WESTMORELAND COAL CO
DEFA14A, 1999-05-03
BITUMINOUS COAL & LIGNITE MINING
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                                  SCHEDULE 14A

                                 (RULE 14a-101)


                            SCHEDULE 14A INFORMATION

                  Proxy Statement Pursuant to Section 14(a) of
                       the Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:
|_|      Preliminary Proxy Statement
|_|      Confidential, for Use of the Commission Only
         (as permitted by Rule 14a-6(e)(2))
|_|      Definitive Proxy Statement
|X|      Definitive Additional Materials
|_|      Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

                            WESTMORELAND COAL COMPANY
                            -------------------------
                (Name of Registrant as Specified In Its Charter)

    ------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the Appropriate Box):
|X|      No fee required.
|_|      Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

         (1)     Title of each class of securities to which transaction applies:
         (2)     Aggregate number of securities to which transaction applies:
         (3)     Per  unit  price  or  other  underlying  value  of  transaction
                 computed  pursuant  to  Exchange  Act  Rule 0-11 (set forth the
                 amount on which the filing fee is  calculated  and state how it
                 was determined):
         (4)     Proposed maximum aggregate value of transaction:
         (5)     Total fee paid:

|_|      Fee paid previously with preliminary materials.
|_|      Check box if any part of the fee is offset as provided by Exchange  Act
         Rule 0-11(a)(2) and identify the filing for which  the  offsetting  fee
         was paid  previously.   Identify  the previous filing  by  registration
         statement number, or the Form or Schedule and the date of its filing.
         (1)     Amount Previously Paid:
         (2)     Form, Schedule or Registration Statement No.:
         (3)     Filing Party:
         (4)     Date Filed:

<PAGE>

May 3, 1999



TO OUR SHAREHOLDERS:

A DISSIDENT COMMITTEE IS SEEKING TO TAKE CONTROL OF WESTMORELAND.

The Westmoreland Coal Company  Shareholders' Meeting will be held in a few days.
Your vote at that meeting is critical to the future  direction of  Westmoreland.
This is because  Westmoreland faces a proxy contest being waged by a self-styled
"Committee"  that is  seeking to replace  your Board of  Directors  with its own
hand-picked nominees and take control of your Company.

YOUR BOARD URGES YOU TO REJECT THE DISSIDENT COMMITTEE  NOMINEES.  PLEASE DO NOT
SIGN ANY BLUE PROXY CARD YOU MAY RECEIVE FROM THEM.

WE BELIEVE THE COMMITTEE WILL DESTROY SHARE VALUE.

While this Committee calls itself "The  Westmoreland  Committee to Enhance Share
Value" we believe a better name would be "The Committee to Destroy Share Value."

THE COMMITTEE IS SEEKING CONTROL OF YOUR COMPANY WITHOUT  OFFERING YOU ANY VALUE
- - NOT ONE CENT - FOR YOUR SHARES.

YOUR CURRENT BOARD AND MANAGEMENT HAVE AN EXCELLENT TRACK RECORD.

Before  telling you more about this  threat to your  Company,  let's  review the
track record of your current Board and management.

Your current Board and management  have saved the Company from  liquidation  and
transformed it from one with  declining  value to one that is moving forward and
ready to build on successes.

Six years ago, when current  management  assumed office,  the Company was headed
downward, confronted with a liquidity crisis and facing growing problems in what
were then its core  businesses.  Large losses had been posted in previous years.
The Company  experienced a further operating loss of $95.2 million in 1993, when
new accounting standards first required  recognition of post-retirement  benefit
expenses for financial statement purposes.  Since that time, your management has
turned  the  Company  around.  That 1993  operating  loss has been  replaced  by
operating profits of $33.6 million in 1997 and $17.1 million in 1998.

<PAGE>

HERE ARE JUST SOME OF OUR OTHER ACCOMPLISHMENTS:

*    Unprofitable  eastern  coal mining  operations  and other  under-performing
     lines of business have been shut down and/or sold,  eliminating  losses and
     dramatically improving our cash position.

*    Virtually  all  commercial  loans  have  been paid off and the  Company  is
     essentially debt free.

*    Total annual overhead costs have been  aggressively  reduced by $22 million
     since 1993.

*    Following  upon earlier  reductions,  corporate  personnel and payroll have
     been drastically reduced by 74% and 50%, respectively,  since 1995 when the
     headquarters were relocated to Colorado Springs.

*    Headquarters  annual  office  rental  costs also have been  slashed by over
     $700,000  since  moving.  The Company pays just $10 per square foot for its
     current space, compared to $30 per square foot in Philadelphia in 1995.

*    The Company is in full  compliance with Coal Act obligations and is funding
     all retiree benefits.

*    Recognizing  the potential value of western coal  operations,  Westmoreland
     has acquired an additional 20% of  Westmoreland  Resources  ("WRI"),  which
     also has allowed us to shelter earnings with our NOL tax assets.

*    Sales and production  levels at WRI have  subsequently been taken to record
     and near-capacity levels.

*    We have fully funded development and construction of all of our independent
     power projects ("IPPs") and brought them into commercial operation.

*    Through dedicated and opportunistic management, we have increased equity in
     IPP earnings  from $3.2  million in 1993 to $64.5  million  (including  the
     restructuring of the Rensselaer power purchase agreement) in 1998.

*    The strategic  sale of the  Rensselaer IPP at a premium value was completed
     in 1999, but only after  successful  negotiations  with the UMWA Funds (the
     "Funds")  freed  it from  Coal  Act  liabilities  as part of the  Company's
     dismissal from Chapter 11.

*    Twenty  million  dollars has been  distributed  to  preferred  shareholders
     through  a highly  successful  self  tender  offer,  and cash  reserves  of
     approximately  $40 million have been accumulated to provide  collateral for
     bonds and notes, working capital, and reinvestment.

<PAGE>

*    In the past 5 years the return on Westmoreland's  common stock has exceeded
     the  return on the common  stock of its peer  group.

*    On April 16, 1999, Westmoreland stock was relisted and began trading on the
     American Stock Exchange.

Throughout one of the toughest periods in the Company's  history,  the Board and
management have maintained a "can-do" attitude and HAVE GOTTEN THE JOB DONE. Our
directors  have  remained  steadfast and faithful to you in the face of enormous
challenges.  Management  and  employees  have  invested  their  "sweat  equity,"
forgoing other  opportunities in order to try to save the Company.  There are no
quitters on the existing team.

THE BOARD'S AND MANAGEMENT'S INTERESTS ARE ALIGNED WITH YOURS.

Management  (including  executive  officers) owns 105,361 shares of common stock
and has  options to  purchase  376,500  shares at prices  ranging  from $2.62 to
$14.27.  These options are valuable only if the price of the stock  continues to
rise. Members of the Board (exclusive of management) own 1,079,600 shares of the
Company's  common stock and have options to purchase  another  18,000  shares at
prices ranging from $4 to $20.  Members of the Board also own 31,195  Depositary
Shares.  Together,  your Board and management beneficially own 22% of the common
stock (including options and assuming conversion of their Depositary Shares). We
have a substantial financial interest in building shareholder value for you.

THE COMMITTEE WAS FORMED OUT OF A GROUP THAT TRIED TO COMPLETELY  LIQUIDATE YOUR
COMPANY.

What is the Committee and what do they want?

In its proxy statement,  the Committee states that it is the "direct  outgrowth"
of the Equity Committee formed during the Company's recent Chapter 11 case. Your
management  had filed for protection  under Chapter 11 of the  Bankruptcy  Code,
which permits a company to reorganize its business. The Equity Committee filed a
motion to convert the Company's  case to Chapter 7, which would have  completely
liquidated the Company.

If the Equity Committee had been successful, all the Company's assets could have
been sold at "going  out of  business"  prices.  The  proceeds  would  have been
distributed  first to creditors,  including the UMWA Funds which claim  enormous
sums.  Remaining money, if any, would have been paid to preferred  shareholders,
who had a liquidation  preference of $75.8 million (at September 1, 1998).  Only
then,  in  the  unlikely  event  that  there  were  funds  left,   would  common
shareholders have been paid anything.

<PAGE>

YOUR BOARD AND  MANAGEMENT  RESISTED  THIS  ILL-CONCEIVED  AND  UNFAIR  PLAN AND
SUCCESSFULLY PRESERVED THE COMPANY.

THEIR NOMINEES  INCLUDE THREE  DIRECTORS OF WILLIAMS  INDUSTRIES.  CHECK OUT THE
HISTORY OF THAT COMPANY.

The Committee  consists of only four  individuals who have nominated  themselves
for Board  membership.  They, in turn,  have nominated three others who recently
bought 100 shares and now claim to have a stake in the Company.  Three  nominees
are current directors of Williams Industries, Incorporated (Nasdaq-WMSI). One of
these  nominees,  Mr.  Williams,  was  President,  Chief  Executive  Officer and
Chairman  of the  Board of that  company  until he  resigned  in 1994  after the
company  suffered four years of losses and was delisted from the Nasdaq National
Market System,  according to press  reports.  Are you  comfortable  turning your
Company over to the Williams group?

THE COMMITTEE DOES NOT UNDERSTAND WESTMORELAND'S BUSINESSES.

The  Committee has proposed a "plan" for  Westmoreland  that shows an astounding
ignorance  of  your  Company  and  its  businesses.   Your  Board  believes  the
Committee's  "plan"  is  fundamentally  flawed,  unrealistic,  unachievable  and
destined to destroy shareholder value.

How else can you explain the Committee's previously announced "plan" to consider
resuming mining at the former Virginia operations?  This is an area where mining
is unionized,  costs are extremely high, and the great companies of the American
coal  industry  have been forced to close  numerous  operations.  Moreover,  the
Company owns only 87,000 tons of reserves in that area today.

Ask yourself why the Committee  would suggest to  shareholders  that the path to
profitability  might be in mining in a  high-cost  area where the Company has no
economically recoverable coal reserves.

WE BELIEVE THE COMMITTEE'S PLAN TO SELL IPP'S IS NOT REALISTIC.

One element of their  "plan" is the sale of all the  Company's  IPPs "as soon as
practicable"  (by the end of 1999  according  to  their  initial  proxy  filing)
"consistent with obtaining fair market value for the assets".  But the Committee
fails to disclose critical  information that makes the proposed sale of the IPPs
at  attractive  prices  difficult in any time frame.  And ask  yourself:  if you
wanted to maximize the value of an asset, would you have announced your absolute
intention to sell "as soon as practicable"?

<PAGE>

THE IPPS CARRY  SIGNIFICANT  LIABILITIES  AND ARE  SUBJECT TO OTHER  CONSTRAINTS
WHICH DIMINISH THEIR SALE VALUE (BUT NOT THEIR OPERATING VALUE).

The Committee concedes in its final proxy statement that  Westmoreland's  assets
are subject to liabilities  under the Coal Act. What they don't tell you is that
these liabilities are very large and could pass to any purchaser and thus to all
of the purchaser's other assets.  Westmoreland  currently  estimates the present
value of its Coal Act  obligations  to be $182  million,  and they could be much
greater if other Coal Act companies fail to meet their obligations. As a result,
the sale values of our assets may be tremendously reduced.

DON'T BELIEVE IT UNLESS THEY PUT IT IN WRITING.

The Committee suggests that the Funds may waive the Coal Act liability, yet they
acknowledge  that  they  have  no  deal.  Nor  do  they  quantify  the  cost  to
Westmoreland's  shareholders  to obtain such a waiver from the UMWA Funds.  From
our experience with the Funds, we do not believe they will waive their rights to
substantial  ongoing  payments,  certainly  not  at a  significantly  discounted
amount.


Don't be fooled.  The Funds' payment to the Committee's  proxy fight expenses is
not a sign of any such agreement.  The Equity Committee demanded that payment as
a condition  to  supporting  the  bankruptcy  dismissal.  (The Equity  Committee
demanded the same thing of your Company, but we refused.)

THERE ARE OTHER CONSTRAINTS ON THE SALE OF THE IPPS.

The number of potential  candidates  to purchase our IPPs is also reduced due to
Federal Energy Regulatory  Commission  requirements which disqualify utility and
affiliate  purchasers from controlling  more than 50% of such projects.  Most of
Westmoreland's  IPPs are  also  small  and  limited  in  terms  of  transmission
connections to major high-cost  power markets.  Finally,  the most  Westmoreland
owns of any IPP is 50%. As a result, partnership documents and related legal and
contractual  obligations  limit the Company's  ability to unilaterally  sell its
interests, much less the underlying assets.

OTHER IPP SALES ARE NOT COMPARABLE.

The Committee's "plan" is based on self-serving comparisons with other IPP sales
that are not comparable to our situation.  In contrast, the Company's opinion is
based on facts and actual experience. You will remember that in 1994 we retained
Merrill Lynch & Co. to conduct a year-long,  worldwide solicitation of potential
purchasers of our IPP interests.  Because of the  constraints  discussed  above,
including the Coal Act, we were unable to consummate a deal at a price that even
reflected projected discounted cash flow from the IPPs.

<PAGE>

THE COMPANY WILL SEIZE THE OPPORTUNITY TO SELL WHEN APPROPRIATE.

We have  demonstrated  that we know how and when to make strategic  asset sales,
e.g. the  Rensselaer  project,  if and when it materially  enhances  shareholder
value. We have done it before and will do so again, if appropriate.

THE  COMMITTEE'S  "PLAN" TO  SUBSTANTIALLY  INCREASE  PRODUCTION  AT WRI IS ALSO
FLAWED AND MISLEADING.

The  Committee  doesn't  tell you  that the  Company  has  already  dramatically
increased  production  and sales at WRI over the last six years from 3.2 million
tons in 1993 to 6.5 million  tons in 1998,  achieving  7.1 million tons in 1997.
WRI is now operating at near capacity, and additional production would require a
substantial capital investment.  Your Board recommends  expanding WRI's capacity
only when additional sales are assured.

The Committee  proposes  substantially  increased  production (and by inference,
substantial  capital  expenditures)  despite  the fact that the very report they
cited in their  preliminary  proxy filing projects that demand for WRI's type of
coal will remain  "virtually  flat" and prices will  "deteriorate  slowly." They
also tell you nothing about the burnability  characteristics of WRI coal or that
it differs from seam to seam.

The Committee also proposes lowering  transportation costs. What they don't tell
you is that our customers  negotiate  and pay these costs.  As they should know,
our customers are large  utilities who negotiate  transportation  rates directly
with the railroads.

CORPORATE FUNCTIONS CANNOT BE DUMPED ON SUBSIDIARIES.

The Committee  also  simplistically  calls for the  elimination of the corporate
office. This office, which we have reduced to just 15 employees, performs all of
the  tasks  vital  to  a  publicly  traded  company,  such  as  financial,  risk
management,  public reporting,  regulatory compliance,  benefit  administration,
human resources, payroll, investor relations, legal, and strategic functions for
the Company, including its subsidiaries. The Committee doesn't say by whom, how,
or whether those critical  functions will be performed  going forward or at what
cost.

THE COMMITTEE HAS NOT DISCLOSED ALL THE FACTS.

Ask yourself why the Committee has told you none of this.

WHAT IS THEIR AGENDA?

Three  Committee  members  would have  liquidated  the Company  under Chapter 7.
Having seen the Company distribute $20 million to preferred  shareholders in the
recent, highly successful tender offer, the Committee now advocates a "hurry-up"
partial liquidation, selling our IPP assets "as soon as practicable." Why?

<PAGE>

PERHAPS THE COMMITTEE HASN'T TOLD YOU THE REST OF THEIR PLAN.

Public records show that the Committee  members purchased large blocks of common
stock during our  restructuring at all-time low prices,  some as low as 25 to 50
cents per share.

*    Are they more interested in a quick sale of the IPPs and  distribution of a
     dividend than in maximizing the value of the Company?

*    How do they  intend  to pay for  Coal Act  liabilities  and  other  retiree
     benefits in the future without the cash  distributions  from the IPPs? What
     happens to the value of the common stock?

*    If they are successful,  will the Committee pay the preferred  shareholders
     only the  amount of the  dividend  arrearage,  $11.9  million?  Or will the
     Committee  declare the Company in liquidation  and, after paying the Funds,
     pay the preferred  shareholders whatever they can of the dividend arrearage
     and the liquidation  preference,  $43.1 million? Again, what happens to the
     value of the common stock?  If they do not pay both the dividend  arrearage
     and the  liquidation  preference  now,  how will they pay future  preferred
     dividends? What happens to the value of the preferred stock?

Ask yourself why the Committee has not addressed any of these questions.

PREFERRED  DIVIDEND  ARREARAGES  ARE A PRIORITY FOR US.  INCREASING  SHAREHOLDER
VALUE IS OUR TOP PRIORITY.

The  current  management  and  Board  are  aware  of the  concern  of  preferred
shareholders  regarding  the  dividend  arrearage.  We are  anxious to  continue
exploring  this  issue  with  preferred  shareholders  and to  continue  seeking
solutions  that are in everyone's  best  interests.  But we won't make you empty
promises  or hint at things  you'd like to hear just to win your  vote.  We will
only make  promises  that we believe we can deliver.  Our highest  priority will
continue to be increasing value for all shareholders.

YOUR VOTE IS IMPORTANT.

Your vote is  important  to ensure  that  Westmoreland  has an  experienced  and
independent  Board that represents all  shareholders,  a Board that  understands
Westmoreland's  businesses  and has a clear - and  workable - strategic  plan to
enhance shareholder value.

Please  vote  your  WHITE  proxy  card  today and  return it using the  enclosed
pre-paid envelope.

<PAGE>

Thank you for your continued loyalty and support.

Sincerely,

The Board and Management
of Westmoreland Coal Company


                SIGN, DATE AND RETURN THE WHITE PROXY CARD TODAY.

                                   IMPORTANT!

Regardless of how many shares you own, your vote is very important. Please sign,
date and return the enclosed WHITE proxy card.

Please vote each WHITE proxy card you receive  since each  account must be voted
separately. Only your latest dated proxy counts.

We urge you NOT to sign any Blue proxy card sent to you by the Committee.

Even if you have sent a Blue proxy card to the  Committee,  you have every right
to change  your vote.  You may revoke  that proxy,  and vote as  recommended  by
management,  by signing, dating and mailing the enclosed WHITE proxy card in the
enclosed envelope.

If your shares are held in the name of a bank,  broker or other nominee,  please
direct the party  responsible  for your  account to vote the WHITE proxy card as
recommended by management

If you have any  questions  on how to vote your  shares,  please  call our proxy
solicitor:



                        MORROW & CO. at (800) 662 - 5200.


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