Western Kentucky coal producer Armstrong Energy Inc. said Nov. 28 that it intends, subject to market conditions, to offer $200m aggregate principal amount of senior secured notes due 2019 in a private offering.
The notes will be offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons in transactions outside the U.S. under Regulation S of the Securities Act of 1933, as amended.
Armstrong said it intends to use the net proceeds of the notes offering to repay all amounts currently outstanding under its existing senior secured credit facility and the remainder for general corporate purposes, including capital expenditures and potential reserve acquisitions.
Armstrong Energy, through operating subsidiary Armstrong Coal, is a diversified producer of low-chlorine, high-sulfur thermal coal from the Illinois Basin, with both surface and underground mines. Armstrong controls about 326 million tons of proven and probable coal reserves in western Kentucky and currently operates seven mines. Armstrong also owns and operates three coal processing plants, a rail loadout and a dock facility located on the Green River, a major thoroughfare for barged coal moving into the Ohio River market.
Armstrong Energy had made a series of prospectus filings with the SEC starting in October 2011, with the latest filed July 2, related to a planned initial public offering. But that IPO hasn’t happened yet. Sources say with a down coal market right now, this is a bad time to go public, though the Illinois Basin has been doing relatively well during this period. Another Illinois Basin producer with IPO plans, Chris Cline’s Foresight Energy Partners LP, hasn’t made a prospectus filing with the SEC since April 12.