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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DECEMBER 5, 2000
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DATE OF REPORT (date of earliest event reported)
COMMISSION FILE NUMBER 333-59037
LODESTAR HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3903875
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
30 ROCKEFELLER PLAZA, SUITE 4225
NEW YORK, NEW YORK 10112
(Address of principal executive offices) (Zip Code)
(859) 255-4006
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
Lodestar Holdings, Inc. ("Lodestar") expects preliminary EBITDA to be between
$4.5 million and $5.0 million for the three-month period ended October 31, 2000.
Preliminary EBITDA does not include year-end adjustments of workers'
compensation liability, adjustments which may be required in conjunction with
FAS-121 impairment issues nor any other audit adjustments which may be required.
Lodestar expects that final audited results for the fiscal year ended October
31, 2000, will be released prior to December 31, 2000.
In conjunction with its preliminary results, following is a table by region:
<TABLE>
<CAPTION>
REGION EBITDA TONS SOLD
--------------------- ------------ -------------
(IN MILLIONS)
<S> <C> <C>
West Kentucky $ 2.5 1.1
East Kentucky 3.5 - 4.0 1.1
Utah/Colorado 0.3 0.2
Corporate (1.8) -
------------ -------
$ 4.5 - $5.0 2.4
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</TABLE>
West Kentucky's operations were below expectations due primarily to a low
salable yield of 58% during the quarter. Additionally, realization during the
quarter was hampered by several factors including: (i.) contract price reopeners
which lowered the contract prices effective July 1, 2000; (ii.) shipments of
lower-priced orders which were entered into during the first-half of the year;
and (iii.) the reduction of a stockpile of lower quality coal.
EBITDA in Eastern Kentucky was improved partially due to an improved pricing
trend for both contract and spot orders. Nevertheless, costs of the Company's
surface mines continue to be negatively impacted by high fuel and fuel-related
expenditures. Additionally, costs of repairs and maintenance on the surface
equipment was abnormally high due to a significant number of major equipment
failures.
The results from Lodestar's operations in Utah and Colorado were about as
expected. The Company's White Oak mine began its pillaring operations, which are
expected to be completed in the first half of calendar year 2001.
Given Lodestar's current equipment complement, and market conditions similar to
those experienced in the last fiscal quarter, the management of Lodestar
believes that EBITDA for the fiscal year 2001 would range between $20.0 million
and $25.0 million.
With respect to other significant matters:
1. Lodestar did not make its November 15, 2000 interest payment on its
$150.0 million, 11.5% Senior Notes due 2005 (the "Notes"). The Company
is continuing an attempt to negotiate a restructuring of the Notes with
the Noteholders. In conjunction with such restructuring efforts,
Lodestar is investigating various alternatives, including possible
investments from strategic investors.
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2. Lodestar made its final installment of $1.675 million on the $6.7
million term loan due to its lenders on November 1, 2000. As of
December 1, 2000, the borrowings under its Senior Credit Facility were
$36.2 million and its borrowing availability was $2.1 million. Although
the Company remains in violation of certain covenants of its Senior
Credit Facility, the Lenders have continued to fund and have taken no
actions to restrict Lodestar from operating in the normal course of
business.
3. Due to the Company's financial situation, Lodestar has been unable to
access surety markets to satisfy its bonding requirements in the normal
course of business. Accordingly, by the end of December, it is expected
that Lodestar will have posted approximately $0.7 million of cash or
cash equivalents to support its bonding requirements. The next major
bonding commitment which the Company has is a request from the State of
Utah to replace approximately $5.0 million in Frontier Bonds by
December 31, 2000.
4. Due to Lodestar's inability to obtain economically viable workers'
compensation coverage in the State of Utah, all of its work force was
transferred to contract status on November 29, 2000.
5. Lodestar has approximately $4.0 million of non-discretionary capital to
be spent in the first quarter of calendar year 2001. This includes
moving gas lines in Eastern Kentucky, a bleeder shaft in Western
Kentucky, and development, which is ongoing, at its Horizon operation
in Utah.
6. On October 31, 2000, the ownership of Lodestar was transferred from the
Renco Group, Inc. to Iracoal, Inc., a newly formed corporation wholly
owned by Ira Leon Rennert. By virtue of his ownership of all the
outstanding shares of Iracoal, Inc., Mr. Rennert continues to be in a
position to control actions that require the consent of the holders
of Lodestar's outstanding shares of common stock.
FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements," within the meaning of the
Private Securities Litigation Reform Act of 1995, which involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such risks, uncertainties and other important
factors include, among others: general economic and business conditions;
industry capacity; demand; industry trends, including coal pricing; competition;
the loss of any significant customers or long-term contracts; availability of
qualified personnel; major equipment failures; changes in, or failure or
inability to comply with, government regulation, including, without limitation,
environmental regulations; outcome of litigation; ability to meet its liquidity
needs and other factors referenced in this report. These forward-looking
statements speak only as of the date of this report. The Company expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LODESTAR HOLDINGS, INC.
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By: /s/ Michael E. Donohue
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Michael E. Donohue
Vice President & Chief Financial Officer
(duly authorized officer, principal financial
and accounting officer)
Date: December 5, 2000
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