ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2017
|
|
or
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
81-0706839
(I.R.S Employer
Identification No.)
|
16243 Highway 216
Brookwood, Alabama
(Address of principal executive offices)
|
|
35444
(Zip Code)
|
Large accelerated filer
o
|
|
Accelerated filer
o
|
|
Non-accelerated filer
ý
(Do not check if a
smaller reporting company)
|
|
Smaller reporting company
o
|
Emerging growth company
ý
|
|
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
Item 1A
.
|
||
•
|
successful implementation of our business strategies;
|
•
|
a substantial or extended decline in pricing or demand for met coal;
|
•
|
global steel demand and the downstream impact on met coal prices;
|
•
|
inherent difficulties and challenges in the coal mining industry that are beyond our control;
|
•
|
geologic, equipment, permitting, site access, operational risks and new technologies related to mining;
|
•
|
impact of weather and natural disasters on demand and production;
|
•
|
our relationships with, and other conditions affecting, our customers;
|
•
|
unavailability of, or price increases in, the transportation of our met coal;
|
•
|
competition and foreign currency fluctuations;
|
•
|
our ability to comply with covenants in our asset-based revolving credit facility (“ABL Facility”);
|
•
|
significant cost increases and fluctuations, and delay in the delivery of raw materials, mining equipment and purchased components;
|
•
|
work stoppages, negotiation of labor contracts, employee relations and workforce availability;
|
•
|
adequate liquidity and the cost, availability and access to capital and financial markets;
|
•
|
any consequences related to our transfer restrictions under our certificate of incorporation;
|
•
|
our obligations surrounding reclamation and mine closure;
|
•
|
inaccuracies in our estimates of our met coal reserves;
|
•
|
our ability to develop or acquire met coal reserves in an economically feasible manner;
|
•
|
challenges to our licenses, permits and other authorizations;
|
•
|
challenges associated with environmental, health and safety laws and regulations;
|
•
|
regulatory requirements associated with federal, state and local regulatory agencies, and such agencies’ authority to order temporary or permanent closure of our mines;
|
•
|
climate change concerns and our operations’ impact on the environment;
|
•
|
failure to obtain or renew surety bonds on acceptable terms, which could affect our ability to secure reclamation and coal lease obligations;
|
•
|
costs associated with our pension and benefits, including post-retirement benefits;
|
•
|
costs associated with our workers’ compensation benefits;
|
•
|
litigation, including claims not yet asserted;
|
•
|
our ability to continue paying our quarterly dividend or pay any special dividend;
|
•
|
our ability to commence a stock repurchase program; and
|
•
|
terrorist attacks or security threats, including cybersecurity threats;
|
|
|
Successor
|
||||||
|
|
June 30, 2017 (Unaudited)
|
|
December 31,
2016 |
||||
|
|
|
|
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
155,792
|
|
|
$
|
150,045
|
|
Short-term investments
|
|
17,501
|
|
|
17,501
|
|
||
Trade accounts receivable
|
|
92,551
|
|
|
65,896
|
|
||
Other receivables
|
|
4,700
|
|
|
5,901
|
|
||
Inventories, net
|
|
75,286
|
|
|
39,420
|
|
||
Prepaid expenses
|
|
16,684
|
|
|
12,010
|
|
||
Total current assets
|
|
362,514
|
|
|
290,773
|
|
||
Mineral interests, net
|
|
134,597
|
|
|
143,231
|
|
||
Property, plant and equipment, net
|
|
495,072
|
|
|
496,959
|
|
||
Other long-term assets
|
|
18,178
|
|
|
16,668
|
|
||
Total assets
|
|
$
|
1,010,361
|
|
|
$
|
947,631
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
13,821
|
|
|
$
|
6,043
|
|
Accrued expenses
|
|
61,791
|
|
|
47,339
|
|
||
Other current liabilities
|
|
4,622
|
|
|
8,405
|
|
||
Current portion of long-term debt
|
|
2,906
|
|
|
2,849
|
|
||
Total current liabilities
|
|
83,140
|
|
|
64,636
|
|
||
Long-term debt
|
|
2,257
|
|
|
3,725
|
|
||
Deferred income taxes
|
|
1,944
|
|
|
1,944
|
|
||
Asset retirement obligations
|
|
97,708
|
|
|
96,050
|
|
||
Other long-term liabilities
|
|
28,192
|
|
|
28,309
|
|
||
Total liabilities
|
|
213,241
|
|
|
194,664
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
||||
Stockholders’ Equity:
|
|
|
|
|
||||
Common stock, $0.01 par value per share (Authorized-140,000,000 shares, issued and outstanding-53,444,810 and 53,442,532, respectively)
|
|
534
|
|
|
533
|
|
||
Preferred stock, $0.01 par value per share (10,000,000 shares authorized, no shares issued and outstanding)
|
|
—
|
|
|
—
|
|
||
Additional paid in capital
|
|
610,759
|
|
|
802,107
|
|
||
Retained earnings (accumulated deficit)
|
|
185,827
|
|
|
(49,673
|
)
|
||
Total stockholders’ equity
|
|
797,120
|
|
|
752,967
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
1,010,361
|
|
|
$
|
947,631
|
|
|
Successor
(Unaudited) |
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six
months ended June 30, |
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
351,788
|
|
|
$
|
85,415
|
|
|
$
|
592,844
|
|
|
|
$
|
65,154
|
|
Other revenues
|
11,582
|
|
|
6,059
|
|
|
24,490
|
|
|
|
6,229
|
|
||||
Total revenues
|
363,370
|
|
|
91,474
|
|
|
617,334
|
|
|
|
71,383
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales (exclusive of items shown separately below)
|
160,152
|
|
|
103,866
|
|
|
266,296
|
|
|
|
72,297
|
|
||||
Cost of other revenues (exclusive of items shown separately below)
|
7,795
|
|
|
5,126
|
|
|
15,974
|
|
|
|
4,698
|
|
||||
Depreciation and depletion
|
19,650
|
|
|
15,821
|
|
|
34,232
|
|
|
|
28,958
|
|
||||
Selling, general and administrative
|
8,660
|
|
|
5,815
|
|
|
13,830
|
|
|
|
9,008
|
|
||||
Other postretirement benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
|
6,160
|
|
||||
Restructuring costs
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3,418
|
|
||||
Transaction and other costs
|
3,837
|
|
|
10,475
|
|
|
12,873
|
|
|
|
—
|
|
||||
Total costs and expenses
|
200,094
|
|
|
141,103
|
|
|
343,205
|
|
|
|
124,539
|
|
||||
Operating income (loss)
|
163,276
|
|
|
(49,629
|
)
|
|
274,129
|
|
|
|
(53,156
|
)
|
||||
Interest expense, net
|
(642
|
)
|
|
(434
|
)
|
|
(1,250
|
)
|
|
|
(16,562
|
)
|
||||
Reorganization items, net
|
—
|
|
|
—
|
|
|
—
|
|
|
|
7,920
|
|
||||
Income (loss) before income tax expense
|
162,634
|
|
|
(50,063
|
)
|
|
272,879
|
|
|
|
(61,798
|
)
|
||||
Income tax expense
|
32,769
|
|
|
—
|
|
|
34,706
|
|
|
|
18
|
|
||||
Net income (loss)
|
$
|
129,865
|
|
|
$
|
(50,063
|
)
|
|
$
|
238,173
|
|
|
|
$
|
(61,816
|
)
|
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share—basic and diluted
|
$
|
2.46
|
|
|
$
|
(0.95
|
)
|
|
$
|
4.52
|
|
|
|
|
||
Weighted average number of shares outstanding—basic and diluted
|
52,721
|
|
|
52,640
|
|
|
52,702
|
|
|
|
|
|||||
Dividends per share:
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
3.61
|
|
|
|
|
|
Common Stock
|
|
Preferred Stock
|
|
Additional Paid in Capital
|
|
Retained Earnings (Accumulated
deficit)
|
|
Total
Stockholders’
Equity
|
||||||||||
Balance at December 31, 2016 (Successor)
|
$
|
533
|
|
|
$
|
—
|
|
|
$
|
802,107
|
|
|
$
|
(49,673
|
)
|
|
$
|
752,967
|
|
Net income
|
—
|
|
|
—
|
|
|
|
|
|
238,173
|
|
|
238,173
|
|
|||||
Dividends paid ($3.61 per share)
|
—
|
|
|
—
|
|
|
(190,000
|
)
|
|
(2,673
|
)
|
|
(192,673
|
)
|
|||||
Purchase accounting measurement period adjustment (See Note 3)
|
—
|
|
|
—
|
|
|
(3,525
|
)
|
|
—
|
|
|
(3,525
|
)
|
|||||
Equity award modification (See Note 10)
|
—
|
|
|
—
|
|
|
1,255
|
|
|
—
|
|
|
1,255
|
|
|||||
Stock compensation
|
—
|
|
|
—
|
|
|
922
|
|
|
—
|
|
|
922
|
|
|||||
Common shares issued
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Balance at June 30, 2017 (Successor) (Unaudited)
|
$
|
534
|
|
|
$
|
—
|
|
|
$
|
610,759
|
|
|
$
|
185,827
|
|
|
$
|
797,120
|
|
|
Successor
(Unaudited)
|
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six months ended June 30,
|
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
129,865
|
|
|
$
|
(50,063
|
)
|
|
$
|
238,173
|
|
|
|
$
|
(61,816
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and depletion
|
19,650
|
|
|
15,821
|
|
|
34,232
|
|
|
|
28,958
|
|
||||
Deferred income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
|
18
|
|
||||
Stock based compensation expense
|
922
|
|
|
125
|
|
|
922
|
|
|
|
390
|
|
||||
Non-cash reorganization items
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(18,882
|
)
|
||||
Amortization of debt issuance costs and debt discount, net
|
427
|
|
|
376
|
|
|
889
|
|
|
|
10,164
|
|
||||
Accretion of asset retirement obligations
|
904
|
|
|
735
|
|
|
1,899
|
|
|
|
1,169
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Trade accounts receivable
|
3,629
|
|
|
(28,041
|
)
|
|
(26,655
|
)
|
|
|
15,097
|
|
||||
Other receivables
|
1,442
|
|
|
124
|
|
|
1,200
|
|
|
|
1,070
|
|
||||
Inventories
|
(4,339
|
)
|
|
14,677
|
|
|
(32,931
|
)
|
|
|
677
|
|
||||
Prepaid expenses and other current assets
|
(2,507
|
)
|
|
(9,675
|
)
|
|
(4,674
|
)
|
|
|
13,020
|
|
||||
Accounts payable
|
(2,459
|
)
|
|
(7,349
|
)
|
|
7,778
|
|
|
|
(15,338
|
)
|
||||
Accrued expenses and other current liabilities
|
17,072
|
|
|
28,593
|
|
|
10,017
|
|
|
|
(16,083
|
)
|
||||
Other
|
(3,202
|
)
|
|
5,789
|
|
|
(3,893
|
)
|
|
|
858
|
|
||||
Net cash provided by (used in) operating activities
|
161,404
|
|
|
(28,888
|
)
|
|
226,957
|
|
|
|
(40,698
|
)
|
||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
||||||||
Purchase of property, plant and equipment
|
(16,885
|
)
|
|
(6,014
|
)
|
|
(28,263
|
)
|
|
|
(5,422
|
)
|
||||
Proceeds from sale of property, plant and equipment
|
—
|
|
|
34
|
|
|
—
|
|
|
|
—
|
|
||||
Cash paid for acquisition, net of cash acquired
|
—
|
|
|
(24,107
|
)
|
|
—
|
|
|
|
—
|
|
||||
Proceeds from termination of life insurance policy
|
—
|
|
|
12,857
|
|
|
—
|
|
|
|
—
|
|
||||
Purchases of short-term investments
|
—
|
|
|
(17,000
|
)
|
|
—
|
|
|
|
—
|
|
||||
Net cash used in investing activities
|
(16,885
|
)
|
|
(34,230
|
)
|
|
(28,263
|
)
|
|
|
(5,422
|
)
|
||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
||||||||
Dividends paid
|
(2,673
|
)
|
|
—
|
|
|
(192,673
|
)
|
|
|
—
|
|
||||
Proceeds from Rights Offering
|
—
|
|
|
200,000
|
|
|
—
|
|
|
|
—
|
|
||||
Proceeds from issuance of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
|
15,723
|
|
||||
Retirements of debt
|
(766
|
)
|
|
(765
|
)
|
|
(1,531
|
)
|
|
|
(285
|
)
|
||||
Net cash transfers to Parent
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(13,290
|
)
|
||||
Debt issuance costs paid
|
—
|
|
|
(4,515
|
)
|
|
—
|
|
|
|
(8,388
|
)
|
||||
Net cash provided by (used in) financing activities
|
(3,439
|
)
|
|
194,720
|
|
|
(194,204
|
)
|
|
|
(6,240
|
)
|
||||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
141,080
|
|
|
131,602
|
|
|
4,490
|
|
|
|
(52,360
|
)
|
||||
Cash and cash equivalents and restricted cash at beginning of period
|
16,066
|
|
|
—
|
|
|
152,656
|
|
|
|
84,462
|
|
||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
157,146
|
|
|
$
|
131,602
|
|
|
$
|
157,146
|
|
|
|
$
|
32,102
|
|
|
Successor
|
||||||
|
June 30, 2017
|
|
December 31,
2016
|
||||
Cash and cash equivalents
|
$
|
155,792
|
|
|
$
|
150,045
|
|
Restricted cash included in other long-term assets
|
1,354
|
|
|
2,611
|
|
||
Total cash and cash equivalents and restricted cash included in the Statements of Cash Flows
|
$
|
157,146
|
|
|
$
|
152,656
|
|
Final purchase price:
|
|
||
Cash paid
|
$
|
50,830
|
|
Fair value of First Lien Obligations relinquished in exchange for net assets of the Predecessor
|
598,607
|
|
|
Total purchase price
|
$
|
649,437
|
|
|
|
Predecessor
|
||||||
|
|
For the three months ended
March 31, 2016
|
||||||
(in thousands)
|
|
As
reported
|
|
Pro forma
|
||||
Revenue
|
|
$
|
71,383
|
|
|
$
|
71,383
|
|
Net loss
|
|
$
|
(61,816
|
)
|
|
$
|
(31,759
|
)
|
|
Successor
|
||||||
|
June 30, 2017
|
|
December 31, 2016
|
||||
Coal
|
$
|
52,738
|
|
|
$
|
18,788
|
|
Raw materials, parts, supplies and other, net
|
22,548
|
|
|
20,632
|
|
||
Total inventories, net
|
$
|
75,286
|
|
|
$
|
39,420
|
|
|
Successor
(Unaudited) |
||||||||||
|
For the three
months ended June 30, |
|
For the six
months ended June 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
129,865
|
|
|
$
|
(50,063
|
)
|
|
$
|
238,173
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares used to compute net income (loss) per share—basic and diluted
|
52,721
|
|
|
52,640
|
|
|
52,702
|
|
|||
Net income (loss) per share—basic and diluted
|
$
|
2.46
|
|
|
$
|
(0.95
|
)
|
|
$
|
4.52
|
|
|
|
Successor
|
||||||||||||||
|
|
Fair Value Measurements as of June 30, 2017 Using:
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Natural gas swap contracts
|
|
$
|
—
|
|
|
$
|
440
|
|
|
$
|
—
|
|
|
$
|
440
|
|
|
|
Successor
|
||||||||||||||
|
|
Fair Value Measurements as of December 31, 2016 Using:
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Natural gas swap contracts
|
|
$
|
—
|
|
|
$
|
3,784
|
|
|
$
|
—
|
|
|
$
|
3,784
|
|
|
Predecessor
|
||
|
For the three months
ended March 31, 2016
|
||
Professional fees
|
(10,962
|
)
|
|
Rejected executory contracts, leases and other
|
18,882
|
|
|
Reorganization items, net
|
$
|
7,920
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six months ended June 30,
|
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Mining
|
$
|
351,788
|
|
|
$
|
85,415
|
|
|
$
|
592,844
|
|
|
|
$
|
65,154
|
|
All other
|
11,582
|
|
|
6,059
|
|
|
24,490
|
|
|
|
6,229
|
|
||||
Total revenues
|
$
|
363,370
|
|
|
$
|
91,474
|
|
|
$
|
617,334
|
|
|
|
$
|
71,383
|
|
|
Successor
|
|
|
Predecessor
|
|||||||||||
|
For the three
months ended June 30, |
|
For the six months ended June 30,
|
|
|
For the three
months ended March 31, |
|||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
|||||||
Capital Expenditures
|
|
|
|
|
|
|
|
|
|||||||
Mining
|
16,093
|
|
|
$
|
5,343
|
|
|
$
|
26,586
|
|
|
|
$
|
4,588
|
|
All other
|
792
|
|
|
671
|
|
|
1,677
|
|
|
|
834
|
|
|||
Total capital expenditures
|
16,885
|
|
|
$
|
6,014
|
|
|
$
|
28,263
|
|
|
|
$
|
5,422
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six months ended June 30,
|
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
Segment Adjusted EBITDA
|
$
|
191,636
|
|
|
$
|
(18,451
|
)
|
|
$
|
326,548
|
|
|
|
$
|
(7,143
|
)
|
Other revenues
|
11,582
|
|
|
6,059
|
|
|
24,490
|
|
|
|
6,229
|
|
||||
Cost of other revenues
|
(7,795
|
)
|
|
(5,126
|
)
|
|
(15,974
|
)
|
|
|
(4,698
|
)
|
||||
Depreciation and depletion
|
(19,650
|
)
|
|
(15,821
|
)
|
|
(34,232
|
)
|
|
|
(28,958
|
)
|
||||
Selling, general and administrative
|
(8,660
|
)
|
|
(5,815
|
)
|
|
(13,830
|
)
|
|
|
(9,008
|
)
|
||||
Other postretirement benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(6,160
|
)
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(3,418
|
)
|
||||
Transaction and other costs
|
(3,837
|
)
|
|
(10,475
|
)
|
|
(12,873
|
)
|
|
|
—
|
|
||||
Interest expense, net
|
(642
|
)
|
|
(434
|
)
|
|
(1,250
|
)
|
|
|
(16,562
|
)
|
||||
Reorganization items, net
|
—
|
|
|
—
|
|
|
—
|
|
|
|
7,920
|
|
||||
Income tax expense
|
(32,769
|
)
|
|
—
|
|
|
(34,706
|
)
|
|
|
(18
|
)
|
||||
Net income (loss)
|
$
|
129,865
|
|
|
$
|
(50,063
|
)
|
|
$
|
238,173
|
|
|
|
$
|
(61,816
|
)
|
|
Successor
(Unaudited) |
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six
months ended June 30, |
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
(in thousands)
|
|
|
|
|
||||||||||||
Segment Adjusted EBITDA
|
$
|
191,636
|
|
|
$
|
(18,451
|
)
|
|
$
|
326,548
|
|
|
|
$
|
(7,143
|
)
|
Metric tons sold
|
1,762
|
|
|
1,022
|
|
|
2,784
|
|
|
|
777
|
|
||||
Metric tons produced
|
1,732
|
|
|
828
|
|
|
3,195
|
|
|
|
801
|
|
||||
Average selling price per metric ton
|
$
|
199.65
|
|
|
$
|
83.57
|
|
|
$
|
212.94
|
|
|
|
$
|
83.85
|
|
Cash cost of sales per metric ton
|
$
|
90.62
|
|
|
$
|
68.14
|
|
|
$
|
95.30
|
|
|
|
$
|
69.74
|
|
Adjusted EBITDA
|
$
|
188,482
|
|
|
$
|
8,073
|
|
|
$
|
323,947
|
|
|
|
$
|
(9,048
|
)
|
•
|
our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure;
|
•
|
the ability of our assets to generate sufficient cash flow to pay distributions;
|
•
|
our ability to incur and service debt and fund capital expenditures; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
•
|
our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
|
Successor
(Unaudited) |
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six
months ended June 30, |
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
(in thousands)
|
|
|
|
|
||||||||||||
Cost of sales
|
$
|
160,152
|
|
|
$
|
103,866
|
|
|
$
|
266,296
|
|
|
|
$
|
72,297
|
|
Asset retirement obligation accretion
|
(401
|
)
|
|
(267
|
)
|
|
(882
|
)
|
|
|
(93
|
)
|
||||
Stock compensation expense
|
(75
|
)
|
|
—
|
|
|
(75
|
)
|
|
|
—
|
|
||||
Mine No. 4 idle costs
(1)
|
—
|
|
|
(5,342
|
)
|
|
—
|
|
|
|
(10,173
|
)
|
||||
VEBA contribution
(2)
|
—
|
|
|
(25,000
|
)
|
|
—
|
|
|
|
—
|
|
||||
Other (operating overhead, etc.)
|
—
|
|
|
(3,614
|
)
|
|
—
|
|
|
|
(7,843
|
)
|
||||
Cash cost of sales
|
$
|
159,676
|
|
|
$
|
69,643
|
|
|
$
|
265,339
|
|
|
|
$
|
54,188
|
|
(1)
|
Represents idle costs incurred, such as electricity, insurance and maintenance labor. This mine was idled in early 2016 and restarted in August 2016.
|
(2)
|
We entered into a new initial collective bargaining agreement with the United Mine Workers Association ("UMWA") pursuant to which we agreed to contribute $25.0 million to a Voluntary Employees' Beneficiary Association ("VEBA") trust formed and administered by the UMWA.
|
•
|
our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
|
Successor
(Unaudited) |
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six
months ended June 30, |
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
|
|
|
|
|
||||||||||||
Net income (loss)
|
$
|
129,865
|
|
|
$
|
(50,063
|
)
|
|
$
|
238,173
|
|
|
|
$
|
(61,816
|
)
|
Interest expense, net
|
642
|
|
|
434
|
|
|
1,249
|
|
|
|
16,562
|
|
||||
Income tax expense
|
32,769
|
|
|
—
|
|
|
34,706
|
|
|
|
18
|
|
||||
Depreciation and depletion
|
19,650
|
|
|
15,821
|
|
|
34,232
|
|
|
|
28,958
|
|
||||
Asset retirement obligation accretion
(1)
|
797
|
|
|
939
|
|
|
1,792
|
|
|
|
1,169
|
|
||||
Stock compensation expense
(2)
|
922
|
|
|
125
|
|
|
922
|
|
|
|
390
|
|
||||
Transaction and other costs
(3)
|
3,837
|
|
|
10,475
|
|
|
12,873
|
|
|
|
—
|
|
||||
Reorganization items, net
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(7,920
|
)
|
||||
Restructuring costs
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3,418
|
|
||||
Mine No. 4 idle costs
(6)
|
—
|
|
|
5,342
|
|
|
—
|
|
|
|
10,173
|
|
||||
VEBA contribution
(7)
|
—
|
|
|
25,000
|
|
|
—
|
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
188,482
|
|
|
$
|
8,073
|
|
|
$
|
323,947
|
|
|
|
$
|
(9,048
|
)
|
(1)
|
Represents non-cash accretion expense associated with our asset retirement obligations.
|
(2)
|
Represents non-cash stock compensation expense associated with equity awards.
|
(3)
|
Represents non-recurring costs incurred by the Company in connection with our IPO.
|
(4)
|
Represents expenses and income directly associated with the Predecessor’s Chapter 11 Cases (as defined in Note 1 and Note 13 to the condensed financial statements).
|
(5)
|
Represents cost and expenses in connection with workforce reductions at Mine No. 4 and Mine No. 7 and corporate headquarters. (See Note 14 to the condensed financial statements)
|
(6)
|
Represents idle costs incurred, such as electricity, insurance and maintenance labor. This mine was idled in early 2016 and restarted in August 2016.
|
(7)
|
We entered into a new initial collective bargaining agreement with the UMWA pursuant to which we agreed to contribute $25.0 million to a VEBA trust formed and administered by the UMWA.
|
|
Successor
|
|||||
|
For the three months ended June 30,
|
|||||
(in thousands)
|
2017
|
|
2016
|
|||
Revenues:
|
|
|
|
|||
Sales
|
$
|
351,788
|
|
|
85,415
|
|
Other revenues
|
11,582
|
|
|
6,059
|
|
|
Total revenues
|
363,370
|
|
|
91,474
|
|
|
Costs and expenses:
|
|
|
|
|||
Cost of sales (exclusive of items shown separately below)
|
160,152
|
|
|
103,866
|
|
|
Cost of other revenues (exclusive of items shown separately below)
|
7,795
|
|
|
5,126
|
|
|
Depreciation and depletion
|
19,650
|
|
|
15,821
|
|
|
Selling, general and administrative
|
8,660
|
|
|
5,815
|
|
|
Transaction and other costs
|
3,837
|
|
|
10,475
|
|
|
Total costs and expenses
|
200,094
|
|
|
141,103
|
|
|
Operating income
|
163,276
|
|
|
(49,629
|
)
|
|
Interest expense, net
|
(642
|
)
|
|
(434
|
)
|
|
Income before income taxes
|
162,634
|
|
|
(50,063
|
)
|
|
Income tax expense
|
32,769
|
|
|
—
|
|
|
Net income
|
$
|
129,865
|
|
|
(50,063
|
)
|
|
Successor
|
||||||
|
For the three months ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Met Coal (metric tons in thousands)
|
|
|
|
||||
Metric tons sold
|
1,762
|
|
|
1,022
|
|
||
Metric tons produced
|
1,732
|
|
|
828
|
|
||
Average selling price per metric ton
|
$
|
199.65
|
|
|
$
|
83.57
|
|
Cash cost of sales per metric ton
|
$
|
90.62
|
|
|
$
|
68.14
|
|
|
Successor
|
|
|
|||
(in thousands)
|
For the
six months
ended
June 30,
2017
(Unaudited)
|
|
% of
Total
Revenues
|
|||
Revenues:
|
|
|
|
|||
Sales
|
$
|
592,844
|
|
|
96.0
|
%
|
Other revenues
|
24,490
|
|
|
4.0
|
%
|
|
Total revenues
|
617,334
|
|
|
100.0
|
%
|
|
Costs and expenses:
|
|
|
|
|||
Cost of sales (exclusive of items shown separately below)
|
266,296
|
|
|
43.1
|
%
|
|
Cost of other revenues (exclusive of items shown separately below)
|
15,974
|
|
|
2.6
|
%
|
|
Depreciation and depletion
|
34,232
|
|
|
5.5
|
%
|
|
Selling, general and administrative
|
13,830
|
|
|
2.2
|
%
|
|
Transaction and other costs
|
12,873
|
|
|
2.1
|
%
|
|
Total costs and expenses
|
343,205
|
|
|
55.6
|
%
|
|
Operating income
|
274,129
|
|
|
44.4
|
%
|
|
Interest expense, net
|
(1,250
|
)
|
|
(0.2
|
)%
|
|
Income before income taxes
|
272,879
|
|
|
44.2
|
%
|
|
Income tax expense
|
34,706
|
|
|
5.6
|
%
|
|
Net income
|
$
|
238,173
|
|
|
38.6
|
%
|
|
Successor
|
||
|
For the
six months
ended
June 30,
2017
(Unaudited)
|
||
Met Coal (metric tons in thousands)
|
|
||
Metric tons sold
|
2,784
|
|
|
Metric tons produced
|
3,195
|
|
|
Average selling price per metric ton
|
$
|
212.94
|
|
Cash cost of sales per metric ton
|
$
|
95.30
|
|
|
Predecessor
|
|
|
|||
(in thousands)
|
For the
three
months
ended
March 31,
2016
|
|
% of
Total
Revenues
|
|||
Revenues:
|
|
|
|
|||
Sales
|
$
|
65,154
|
|
|
91.3
|
%
|
Other revenues
|
6,229
|
|
|
8.7
|
%
|
|
Total revenues
|
71,383
|
|
|
100.0
|
%
|
|
Costs and expenses:
|
|
|
|
|||
Cost of sales (exclusive of items shown separately below)
|
72,297
|
|
|
101.3
|
%
|
|
Cost of other revenues (exclusive of items shown separately below)
|
4,698
|
|
|
6.6
|
%
|
|
Depreciation and depletion
|
28,958
|
|
|
40.6
|
%
|
|
Selling, general and administrative
|
9,008
|
|
|
12.6
|
%
|
|
Other postretirement benefits
|
6,160
|
|
|
8.6
|
%
|
|
Restructuring cost
|
3,418
|
|
|
4.8
|
%
|
|
Total costs and expenses
|
124,539
|
|
|
174.5
|
%
|
|
Operating loss
|
(53,156
|
)
|
|
(74.5
|
)%
|
|
Interest expense, net
|
(16,562
|
)
|
|
(23.2
|
)%
|
|
Reorganization items, net
|
7,920
|
|
|
11.1
|
%
|
|
Loss before income taxes
|
(61,798
|
)
|
|
(86.6
|
)%
|
|
Income tax expense
|
18
|
|
|
—
|
|
|
Net loss
|
$
|
(61,816
|
)
|
|
(86.6
|
)%
|
|
Predecessor
|
||
|
For the
three months
ended
March 31,
2016
|
||
Met Coal (metric tons in thousands)
|
|
||
Metric tons sold
|
777
|
|
|
Metric tons produced
|
801
|
|
|
Average selling price per metric ton
|
$
|
83.85
|
|
Cash cost of sales per metric ton
|
$
|
69.74
|
|
|
Successor
(Unaudited) |
|
|
Predecessor
|
||||||||||||
|
For the three
months ended June 30, |
|
For the six
months ended June 30, |
|
|
For the three
months ended March 31, |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
||||||||
|
|
|
|
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
161,404
|
|
|
$
|
(28,888
|
)
|
|
$
|
226,957
|
|
|
|
$
|
(40,698
|
)
|
Net cash used in investing activities
|
(16,885
|
)
|
|
(34,230
|
)
|
|
(28,263
|
)
|
|
|
(5,422
|
)
|
||||
Net cash provided by (used in) financing activities
|
(3,439
|
)
|
|
194,720
|
|
|
(194,204
|
)
|
|
|
(6,240
|
)
|
||||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
$
|
141,080
|
|
|
$
|
131,602
|
|
|
$
|
4,490
|
|
|
|
$
|
(52,360
|
)
|
Exhibit
Number |
|
Description
|
3.1
|
|
Certificate of Incorporation of Warrior Met Coal, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form S-8 (File No. 333-217389) filed with the Commission on April 19, 2017).
|
|
|
|
3.2
|
|
Bylaws of Warrior Met Coal, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form S-8 (File No. 333-217389) filed with the Commission on April 19, 2017).
|
|
|
|
10.1*
|
|
Amendment No. 3 to Asset-Based Revolving Credit Agreement, dated as of May 15, 2017, to the Asset-Based Revolving Credit Agreement, dated as of April 1, 2016, among Warrior Met Coal, Inc. and certain of its subsidiaries, as borrowers, the guarantors party thereto, Citibank, N.A., as administrative agent and collateral agent, each lender providing additional commitment pursuant to the Amendment, as commitment increase lenders, and the other lenders party to the Credit Agreement, as existing lenders.
|
|
|
|
10.2*
|
|
Registration Rights Agreement, dated as of April 19, 2017, among Warrior Met Coal, Inc. and certain of its equity holders party thereto.
|
|
|
|
10.3†
|
|
Form of Warrior Met Coal, Inc. 2017 Equity Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-38061) filed with the Commission on June 5, 2017).
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
95*
|
|
Mine Safety Disclosures Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 299.104)
|
|
|
|
101*
|
|
XBRL (Extensible Business Reporting Language) - The following materials from Warrior Met Coal, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Balance Sheets, (ii) the Condensed Statements of Operations, (iii) the Condensed Statements of Changes in Stockholders' Equity, (v) the Condensed Statements of Cash Flows, and (vi) Notes to Condensed Financial Statements.
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Management contract, compensatory plan or arrangement.
|
|
Warrior Met Coal, Inc.
|
||
|
|
|
|
|
By:
|
|
/s/ Dale W. Boyles
|
|
|
|
Dale W. Boyles
|
|
|
|
Chief Financial Officer (on behalf of the registrant and as Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
Date: August 3, 2017
|
Exhibit
Number |
|
Description
|
3.1
|
|
Certificate of Incorporation of Warrior Met Coal, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form S-8 (File No. 333-217389) filed with the Commission on April 19, 2017).
|
|
|
|
3.2
|
|
Bylaws of Warrior Met Coal, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form S-8 (File No. 333-217389) filed with the Commission on April 19, 2017).
|
|
|
|
10.1*
|
|
Amendment No. 3 to Asset-Based Revolving Credit Agreement, dated as of May 15, 2017, to the Asset-Based Revolving Credit Agreement, dated as of April 1, 2016, among Warrior Met Coal, Inc. and certain of its subsidiaries, as borrowers, the guarantors party thereto, Citibank, N.A., as administrative agent and collateral agent, each lender providing additional commitment pursuant to the Amendment, as commitment increase lenders, and the other lenders party to the Credit Agreement, as existing lenders.
|
|
|
|
10.2*
|
|
Registration Rights Agreement, dated as of April 19, 2017, among Warrior Met Coal, Inc. and certain of its equity holders party thereto.
|
|
|
|
10.3†
|
|
Form of Warrior Met Coal, Inc. 2017 Equity Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-38061) filed with the Commission on June 5, 2017).
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
95*
|
|
Mine Safety Disclosures Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 299.104)
|
|
|
|
101*
|
|
XBRL (Extensible Business Reporting Language) - The following materials from Warrior Met Coal, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Balance Sheets, (ii) the Condensed Statements of Operations, (iii) the Condensed Statements of Changes in Stockholders' Equity, (v) the Condensed Statements of Cash Flows, and (vi) Notes to Condensed Financial Statements.
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Management contract, compensatory plan or arrangement.
|
SECTION 1.1.
|
Definitions
. In addition to the definitions set forth above, the following terms, as used herein, have the following meanings:
|
SECTION 3.1.
|
Specific Performance
. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate this Agreement. It is accordingly agreed that, in addition to any other applicable remedies at law or equity, the parties and the third party beneficiaries of this Agreement shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement. Each party hereto agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief on the basis that (i) the other party has an adequate remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason at law or in equity. Each of the parties hereto hereby waives (x) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate and (y) any requirement under any law to post a bond or other security as a prerequisite to obtaining equitable relief.
|
SECTION 3.2.
|
Term
. In the event that a given Holder ceases to “beneficially own” (as such term is defined under the Exchange act) one percent (1%) or more of the outstanding Common Stock, all of such Holder’s rights and obligations under this Agreement shall expire and such Holder will cease to be a “Holder” for all purposes hereunder without any further action of the Company or any other party hereto.
|
SECTION 3.3.
|
Amendments and Waivers
.
|
SECTION 3.4.
|
Notices
. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by facsimile or registered or
|
SECTION 3.5.
|
Successors and Assigns
. The rights and obligations of the Holders under this Agreement shall not be assignable by any Holder to any Person that is not a Holder;
provided
, that in the event of a valid transfer of Registrable Securities by a Holder, the rights and obligations of the transferor under this Agreement (solely with respect to the Registrable Securities so transferred) shall be transferred to the transferee, subject to such transferee executing a joinder to this Agreement;
provided
, for the avoidance of doubt, that the transferor in such transaction shall retain its rights and obligations under this Agreement with respect to any Registrable Securities not so transferred. This Agreement shall be binding upon the parties hereto and their respective successors, assigns and transferees.
|
SECTION 3.6.
|
Counterparts
. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement and any signed agreement entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by facsimile, by electronic mail in “portable document
|
SECTION 3.7.
|
Governing Law: Venue: Jurisdiction
. THIS AGREEMENT AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT (INCLUDING ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF OR RELATED TO ANY REPRESENTATION OR WARRANTY MADE IN OR IN CONNECTION WITH THIS AGREEMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Each party hereby agrees that any action based upon, arising out of or relating to this Agreement (including any action concerning the violation or threatened violation of this Agreement) shall be heard and determined in any state or federal court sitting in the Court of Chancery of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, in the United States District Court for the District of Delaware), and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of such courts (and, in the case of appeals, appropriate appellate courts therefrom) in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding. In addition, each party consents to process being served in any such lawsuit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof. The consents to jurisdiction set forth in this paragraph shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this
SECTION 3.7
and shall not be deemed to confer rights on any Person other than the parties hereto. Nothing in this
SECTION 3.7
shall affect or limit any right to serve process in any other manner permitted by law.
|
SECTION 3.8.
|
WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT WHETHER BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
|
SECTION 3.9.
|
Severability
. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction is, as to such jurisdiction, ineffective to the extent of any such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof, or affecting the validity, enforceability or legality of such provision in any other jurisdiction, unless the ineffectiveness of such provision would result in such a material change as to cause
|
SECTION 3.10.
|
Non-Recourse
. All claims, obligations, liabilities, or causes of action (whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement, or the negotiation, execution, or performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement), may be made only against (and are expressly limited to) the entities that are expressly identified as parties in the preamble to this Agreement (“
Contracting Parties
”). No Person who is not a Contracting Party, including without limitation any director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney, or representative of, and any financial advisor or lender to, any Contracting Party, or any director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney, or representative of, and any financial advisor or lender to, any of the foregoing (“
Non-party Affiliates
”), shall have any liability (whether in contract or in tort, in law or in equity, or granted by statute) for any claims, causes of action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, or breach; and, to the maximum extent permitted by law, each Contracting Party hereby waives and releases all such liabilities, claims, causes of action, and obligations against any such Non-party Affiliates.
|
SECTION 3.11.
|
Recapitalization, Exchanges Etc., Affecting Securities
. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Registrable Securities and to any and all Common Stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise, including shares issued by a parent company in connection with a triangular merger) which may be issued in respect of, in exchange for, or in substitution of Registrable Securities, appropriately adjusted for any stock dividends, splits, reverse splits, combinations, reclassifications and the like occurring after the date hereof.
|
SECTION 3.12.
|
Entire Agreement
. This Agreement (including all schedules and exhibits hereto) contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters.
|
SECTION 3.13.
|
Aggregation of Common Stock
. All Registrable Securities held by a Holder, its Affiliates and its other Permitted Transferees shall be aggregated together for purposes of determining the availability of any rights under this Agreement.
|
SECTION 3.14.
|
Headings
. The section headings of this Agreement are for convenience of reference only and shall not, for any purpose, be deemed to be part of this Agreement or otherwise affect the interpretation of this Agreement.
|
SECTION 3.15.
|
No Third Party Beneficiaries
. Except as provided in
SECTION 3.5
, nothing express or implied herein is intended or shall be construed to confer upon any person or entity, other than the parties hereto and their respective successors and assigns and all Indemnified Parties, any rights, remedies or other benefits under or by reason of this Agreement.
|
By:
|
Apollo European Strategic Management, L.P., its investment manager
|
By:
|
Apollo European Strategic Management GP, LLC, its general partner
|
By:
|
Apollo Credit Opportunity Management III LLC, its investment manager
|
By:
|
Apollo Lincoln Private Credit Management, LLC, its investment manager
|
By:
|
GSO Capital Partners LP, its Investment Manager
|
By:
|
GSO Capital Partners LP, its Investment Manager
|
By:
|
GSO Capital Partners LP, its Investment Manager
|
By:
|
GSO Credit Alpha Associates, LLC, its general partner
|
By:
|
GSO Capital Partners LP, its Investment Manager
|
By:
|
GSO Capital Partners LP, its Investment Manager
|
By:
|
GSO Capital Partners LP, its Investment Manager
|
Holder
|
Address
|
Franklin Templeton Variable Insurance Products Trust
Franklin Mutual Shares VIP Fund
|
Shawn Tumulty, Vice President
101 John F Kennedy Parkway
3rd Floor
SHORT HILLS, NJ 07078
|
FS Global Credit Opportunities Fund
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO ADGM Locomotive Blocker Ltd
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO Cactus Credit Opportunities Fund LP
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO Churchill Partners LP
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO Coastline Credit Partners LP
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO Credit Alpha Fund AIV-2 LP
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO Credit-A Partners LP
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO Palmetto Opportunistic Investment Partners LP
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO Special Situations Fund LP
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
GSO SSOMF Locomotive Blocker Ltd
|
Chris Taussig
c/o GSO Capital Partners LP
345 Park Avenue
31st Floor
NEW YORK, NY 10154
|
Holder
|
Address
|
WMC Holdco LLC (Delaware)
|
c/o KKR Credit Advisors (US) LLC
555 California Street
50th Floor
SAN FRANCISCO, CA 94104
|
Zeus Investments LP
|
Joseph D Glatt, Vice President
9 W 57th St
NEW YORK, NY 10019
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Warrior Met Coal, Inc. (the “registrant”);
|
||||||||
|
|
||||||||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||||||||
|
|
||||||||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||||||||
|
|
||||||||
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
||||||||
|
|
||||||||
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||||||
|
|
||||||||
b.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||||||
|
|
||||||||
c.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||||||||
|
|
||||||||
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||||||||
|
|
||||||||
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||||||||
|
|
||||||||
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
||||||||
|
|||||||||
|
|
|
|
||||||
|
|
|
WARRIOR MET COAL, INC.
|
||||||
Date: August 3, 2017
|
By:
|
|
/s/ Walter J. Scheller, III
|
||||||
|
|
|
Walter J. Scheller, III
|
||||||
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Warrior Met Coal, Inc. (the “registrant”);
|
||||||||
|
|
||||||||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||||||||
|
|
||||||||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||||||||
|
|
||||||||
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
||||||||
|
|
||||||||
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||||||
|
|
||||||||
b.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||||||
|
|
||||||||
c.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||||||||
|
|
||||||||
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||||||||
|
|
||||||||
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||||||||
|
|
||||||||
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
||||||||
|
|||||||||
|
|
|
|
||||||
|
|
|
WARRIOR MET COAL, INC.
|
||||||
Date: August 3, 2017
|
By:
|
|
/s/ Dale W. Boyles
|
||||||
|
|
|
Dale W. Boyles
|
||||||
|
|
|
Chief Financial Officer
|
|
|
|
WARRIOR MET COAL, INC.
|
||||
|
|
|
|
||||
Date: August 3, 2017
|
By:
|
|
/s/ Walter J. Scheller, III
|
||||
|
|
|
Walter J. Scheller, III
|
||||
|
|
|
Chief Executive Officer
|
||||
|
|
|
|
||||
Date: August 3, 2017
|
By:
|
|
/s/ Dale W. Boyles
|
||||
|
|
|
Dale W. Boyles
|
||||
|
|
|
Chief Financial Officer
|
||||
|
|
|
|
|
Mining Complex
(1) (3)
|
|
Section 104
S&S Citations
|
|
Section 104(b) Orders
|
|
Section 104(d) Citations and Orders
|
|
Section 110(b)(2) Violations
|
|
Section 107(a) Orders
|
|
Proposed MSHA Assessments
(2)
($ in thousands)
|
|
Fatalities
|
Warrior Met Coal Mining, LLC, No. 4
|
|
22
|
|
—
|
|
—
|
|
—
|
|
—
|
|
32.2
|
|
—
|
Warrior Met Coal Mining, LLC, No. 7
|
|
41
|
|
—
|
|
2
|
|
—
|
|
—
|
|
125.3
|
|
—
|
Warrior Met Coal Mining, LLC, Central Supply
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Warrior Met Coal Mining, LLC, Central Shop
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
(1)
|
MSHA assigns an identification number to each coal mine and may or may not assign separate identification numbers to related facilities such as preparation plants. We are providing the information in the table by mining complex rather than MSHA identification number because we believe that this presentation is more useful to investors. For descriptions of each of these mining operations, please refer to the descriptions under “Business—Description of Business” in the final prospectus for our initial public offering dated April 12, 2017 and filed pursuant to Rule 424(b)(4) with the SEC on April 14, 2017, which is part of our registration statement on Form S-1 (File No. 333-216499). Idle facilities are not included in
|
(2)
|
Amounts listed under this heading include proposed assessments received from MSHA in the current quarterly reporting period for alleged violations, regardless of the issuance date of the related citation or order.
|
(3)
|
The table includes references to specific sections of the Mine Act as follows:
|
•
|
Section 104(a) Citations
include citations for health or safety standards that could significantly and substantially contribute to serious injury if left unabated.
|
•
|
Section 104(b) Orders
represent failures to abate a citation under 104(a) within the period of time prescribed by MSHA and that the period of time prescribed for the abatement should not be further extended. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.
|
•
|
Section 104(d) Citations and Orders
are for unwarrantable failure to comply with mandatory health and safety standards where such violation is of such a nature as could significantly or substantially contribute to the cause and effect of a coal or other mine safety or health hazard.
|
•
|
Section 110(b)(2) Violations
are for flagrant violations.
|
•
|
Section 107(a) Orders
are for situations in which MSHA determined an imminent danger existed.
|
Mining Complex Legal Actions
(1)
|
|
Pending as of
June 30, 2017
|
|
Initiated During Q2 2017
|
|
Resolved During Q2 2017
|
|
|
|
|
|
|
|
Warrior Met Coal Mining, LLC, No. 4
|
|
|
|
|
|
|
29 CFR Part 2700, Subpart B
|
|
1
|
|
1
|
|
—
|
29 CFR Part 2700, Subpart C
|
|
2
|
|
1
|
|
—
|
29 CFR Part 2700, Subpart D
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart E
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart F
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart H
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Warrior Met Coal Mining, LLC, No. 7
|
|
|
|
|
|
|
29 CFR Part 2700, Subpart B
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart C
|
|
5
|
|
3
|
|
—
|
29 CFR Part 2700, Subpart D
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart E
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart F
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart H
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Warrior Met Coal Mining, LLC, Central Shop
|
|
|
|
|
|
|
29 CFR Part 2700, Subpart B
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart C
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart D
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart E
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart F
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart H
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Warrior Met Coal Mining, LLC, Central Supply
|
|
|
|
|
|
|
29 CFR Part 2700, Subpart B
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart C
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart D
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart E
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart F
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart H
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
(1)
|
Effective January 27, 2011, SEC adopted amendments to its rules to implement Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “final rule”). The final rule modified previous reporting requirements and requires that the total number of legal actions pending before the FMSHRC as of the last day of the time period covered by the report be categorized according to type of proceeding, in accordance with the categories established in the Procedural Rules of FMSHRC. SEC rules require that six different categories of pending legal actions be disclosed. Categories for which there is no pending litigation for the respective mine are not listed in the table. The types of proceedings are listed as follows:
|
•
|
“29 CFR Part 2700, Subpart B”
These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart B such as contests of citations and orders filed prior to receipt of a proposed penalty assessment from MSHA, contests related to orders for which penalties are not assessed (such as imminent danger orders under Section 107 of the Mine Act), and emergency response plan dispute proceedings.
|
•
|
“29 CFR Part 2700, Subpart C”
These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart C and are contests of citations and orders after receipt of proposed penalties.
|
•
|
“29 CFR Part 2700, Subpart D”
These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart D and are complaints for compensation, which are cases under section 111 of the Mine Act.
|
•
|
“29 CFR Part 2700, Subpart E”
These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart E and are complaints of discharge, discrimination or interference and temporary reinstatement under section 105 of the Mine Act.
|
•
|
“29 CFR Part 2700, Subpart F”
These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart F such as applications for temporary relief under section 105(b)(2) of the Mine Act from any modification or termination of any order issued thereunder, or from any order issued under section 104 of the Mine Act (other than citations issued under section 104(a) or (f) of the Mine Act).
|
•
|
“29 CFR Part 2700, Subpart H”
These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart H and are appeals of judges’ decisions or orders to FMSHRC, including petitions for discretionary review and review by FMSHRC on its own motion.
|