National Coal Corp. (Nasdaq: NCOC):
- Third quarter 2010 revenues totaled
approximately $9.7 million
- During the three months ended
September 30, 2010, National Coal reported a net loss from
continuing operations of $3.7 million, compared to a net loss from
continuing operations of $4.5 million for the third quarter
2009
- During the three months ended
September 30, 2010, National Coal reported an Adjusted EBITDA of
($0.9) million, compared to $0.1 million for the third quarter of
2009
- The Company has agreed, subject to
shareholder approval, to be acquired by Ranger Energy for $1.00 per
share
National Coal Corp. (Nasdaq: NCOC), a Central and Southern
Appalachian coal producer, reports that for the three months ended
September 30, 2010, it achieved total revenues from continuing
operations of $9.7 million based primarily on the sale of 102,175
tons of coal. In the same prior-year period, National Coal
generated revenues from continuing operations of $22.1 million
based primarily on the sale of 286,447 tons of coal. The decrease
in revenue from coal sales for the three months ended September 30,
2010, as compared to the same period in 2009, was primarily due to
the assignment of a coal supply agreement to Ranger Energy
Investments, LLC on April 20, 2010, as part of the Company’s sale
of certain assets and real property.
For the three months ended September 30, 2010, National Coal
reported a net loss from continuing operations of $3.7 million or
$0.43 per diluted share compared to a net loss of $4.5 million or
$0.53 per diluted share for the three months ended September 30,
2009. For the three month period ended September 30, 2010, National
Coal had an Adjusted Earnings Before Interest, Taxes, and
Depreciation and Amortization (“Adjusted EBITDA”) of ($0.9)
million, compared to an Adjusted EBITDA of $0.1 million for the
third quarter of 2009.
In 2009, the Company concluded that cash generated from
operations would not be sufficient to pay interest or principal on
its 10.5% Notes due December 2010, and began exploring strategic
alternatives to improve liquidity and reduce its debt obligations.
On September 27, 2010, National Coal entered into a merger
agreement with Ranger Energy Investments, LLC, pursuant to which
the Company will merge with a subsidiary of Ranger Energy and each
outstanding share of the Company’s common stock will be converted
into the right to receive $1.00 in cash. A special meeting of
shareholders will be held on December 2, 2010, at which time
shareholders will vote on whether to approve the merger. If
approved, National Coal Corp. will become a privately-held company
and its shares will no longer be publicly traded.
The merger is expected to close prior to December 15, 2010, the
maturity date of the Company’s 10.5% Notes due 2010. If the merger
does not close prior to such date, the Company will default on its
10.5% Notes due 2010 and most likely need to seek protection from
creditors under federal bankruptcy laws.
About National Coal Corp.
Headquartered in Knoxville, Tenn., National Coal Corp., through
its wholly owned subsidiary, National Coal Corporation, is engaged
in coal mining in East Tennessee. Currently, National Coal employs
about 155 people. National Coal sells steam coal to electric
utilities in the Southeastern United States. For more information
and to sign-up for instant news alerts visit
www.nationalcoal.com.
Information About Forward Looking Statements
This release contains “forward-looking statements” that include
information relating to future events and future financial and
operating performance. Examples of forward looking-statements
include the Company’s efforts to address the deterioration in its
financial position, including risks or uncertainties related to the
anticipated closing of the merger. Forward-looking statements
should not be read as a guarantee of future performance or results,
and will not necessarily be accurate indications of the times at,
or by which, that performance or those results will be achieved.
Forward-looking statements are based on information available at
the time they are made and/or management's good faith belief as of
that time with respect to future events, and are subject to risks
and uncertainties that could cause actual performance or results to
differ materially from those expressed in or suggested by the
forward-looking statements. Important factors that could cause
these differences include, but are not limited to the risks more
fully described in the Company's filings with the Securities and
Exchange Commission including the Company's most recently filed
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
which should be read in conjunction herewith for a further
discussion of important factors that could cause actual results to
differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
You should not put undue reliance on any forward-looking
statements. We assume no obligation to update forward-looking
statements to reflect actual results, changes in assumptions or
changes in other factors affecting forward-looking information,
except to the extent required by applicable securities laws. If we
do update one or more forward-looking statements, no inference
should be drawn that we will make additional updates with respect
to those or other forward-looking statements.
Additional Information About the Proposed Merger and Where
You Can Find It
In connection with the proposed merger with Ranger Energy
Investments, LLC, National Coal has filed a proxy statement and
other relevant materials with the Securities and Exchange
Commission (“SEC”). On or about November 1, 2010, National Coal
began mailing the definitive proxy statement to shareholders of
record as of the close of business on October 19, 2010. BEFORE
MAKING ANY VOTING DECISION WITH RESPECT TO THE PROPOSED
TRANSACTION, SHAREHOLDERS OF NATIONAL COAL ARE URGED TO READ THE
PROXY STATEMENT, WHEN IT BECOMES AVAILABLE, AND THE OTHER RELEVANT
MATERIALS FILED BY NATIONAL COAL WITH THE SEC BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The
proxy statement and other relevant materials and any other
documents filed by National Coal with the SEC, may be obtained free
of charge at the SEC’s website at www.sec.gov. In addition,
shareholders of National Coal may obtain free copies of the
documents filed with the SEC by contacting National Coal at 8915
George Williams Rd., Knoxville, TN 37923. You may also read and
copy any reports, statements and other information filed by
National Coal with the SEC at the SEC public reference room at 100
F Street, N.E. Room 1580, Washington, D.C. 20549. Please call the
SEC at 1-800-SEC or visit the SEC’s website for further information
on its public reference room.
National Coal, Ranger Energy and their executive officers and
directors may be deemed to be participants in the solicitation of
proxies from National Coal’s shareholders in favor of the proposed
transaction. Certain executive officers and directors of each
company have interests in the transition that may differ from the
interests of shareholders generally. Additional information
regarding the interests of these participants in the solicitation
of proxies in connection with the proposed transaction can also be
obtained from the definitive proxy statement filed with the SEC in
connection with the proposed transaction, which may be obtained
free of charge from the sources indicated above.
National Coal Corp.
Calculation of EBITDA & Adjusted
EBITDA
(Unaudited) (Dollars in Thousands)
Adjusted EBITDA is defined as net loss
plus (i) other (income) expense, net, (ii) interest expense, (iii)
depreciation, depletion, accretion and amortization minus (iv)
interest income, (v) income tax benefits, (vi) income from joint
ventures (vii) stock compensation expense and (viii) discontinued
operations. We present Adjusted EBITDA to enhance
understanding of our operating performance. We use
Adjusted EBITDA as a criterion for evaluating our performance
relative to that of our peers, including measuring our cost
effectiveness and return on capital, assessing our allocations of
resources and production efficiencies and making compensation
decisions. We believe that Adjusted EBITDA is an
operating performance measure that provides investors and analysts
with a measure of our operating performance and permits them to
evaluate our cost effectiveness and production efficiencies
relative to competitors. In addition, our management
uses Adjusted EBITDA to monitor and evaluate our business
operations, and as a measure of debt covenant
compliance. However, Adjusted EBITDA is not a
measurement of financial performance under accounting principles
generally accepted in the United States of America (“GAAP”) and may
not be comparable to other similarly titled measures of other
companies. Adjusted EBITDA should not be considered as an
alternative to cash flows from operating activities, determined in
accordance with GAAP, as indicators of cash flows. The
following reconciles our net loss to Adjusted EBITDA:
Three Months Ended Nine Months Ended
September 30 September 30 2010
2009 2010 2009 Net Loss (3,696,728 )
(663,950 ) (9,211,630 ) (14,899,936 )
Income tax benefit
- - - - Other (income) expense 6,003 (39,324 ) 158,904 (63,944 )
Interest income (1,376 ) (65,175 ) (6,132 ) (222,281 ) Interest
expense 1,498,769 1,910,496 4,762,493 5,037,908 Depreciation,
depletion, amortization and accretion 1,272,021
2,392,606 4,340,224
7,528,951 EBITDA (921,311 ) 3,534,653 43,859
(2,619,302 ) Stock Comp Expense 55,423 421,661 785,123 1,126,961
Discontinued operations, net of tax -
(3,872,741 ) - 1,485,157
Adjusted EBITDA $ (865,888 ) $ 83,573 $ 828,982
$ (7,184 )
National Coal Corp.
Condensed Consolidated Balance Sheets (Unaudited)
September 30, 2010 December
31, 2009 Assets Current Assets: Cash and cash
equivalents $ 3,136,237 $ 1,185,725 Accounts receivable, net
469,035 366,680 Inventory 2,119,656 1,403,972 Prepaid and other
current assets 733,311 1,550,919 Total
Current Assets 6,458,239 4,507,296 Property, plant,
equipment and mine development, net 23,006,694 40,298,450 Deferred
financing costs 107,130 890,048 Restricted cash 3,707,059 6,211,637
Other non-current assets 847,044 906,097
Total Assets $ 34,126,166 $ 52,813,528
Liabilities and Stockholders' Deficit Current
Liabilities: Accounts payable $ 4,539,504 $ 11,551,663 Accrued
expenses 2,189,591 1,065,355 Borrowings under short-term line of
credit - 3,000,000 Current maturities of long - term debt
42,398,865 42,372,933 Current installments of obligations under
capital leases 148,168 1,237,358 Current portion of asset
retirement obligations 98,528 98,528
Total Current Liabilities 49,374,656 59,325,837 Long - term
debt, less current maturities, net of discount 12,289 270,291
Obligations under capital leases, less current installments 27,380
140,958 Asset retirement obligations, less current portion
3,579,928 3,790,212 Deferred revenue 1,000,000 1,000,000 Other
non-current liabilities 799,327 589,139
Total Liabilities 54,793,580 65,116,437
Stockholders' Deficit: Preferred stock, $.0001 par value; 10
million shares authorized; no shares issued or outstanding - -
Common Stock, $.0001 par value; 120 million shares authorized;
8,545,765 and 8,578,473 shares issued and outstanding at September
30, 2010 and December 31, 2009, respectively 855 858 Additional
paid - in capital 117,041,538 116,194,411 Accumulated deficit
(137,709,807 ) (128,498,178 ) Total Stockholders'
Deficit (20,667,414 ) (12,302,909 ) Total Liabilities
and Stockholders' Deficit $ 34,126,166 $ 52,813,528
National Coal Corp. Condensed Consolidated
Statements of Operations (Unaudited)
For the Three Months Ended For the Nine Months
Ended September 30, September 30, 2010
2009 2010 2009 Revenues: Coal sales $
8,820,390 $ 21,483,618 $ 35,077,102 $ 62,325,476 Other revenues
845,811 637,181 1,388,699
2,400,759 Total revenues 9,666,201 22,120,799
36,465,801 64,726,235 Operating expenses: Cost of coal sales
(exclusive of depreciation, depletion, amortization and accretion)
8,960,772 20,028,882 33,388,620 58,295,500 Cost of services
(exclusive of depreciation, depletion, amortization and accretion)
57,682 608,274 85,241 2,316,948 Depreciation, depletion,
amortization and accretion 1,272,021 2,392,606 4,340,224 7,528,951
Gain on asset disposal, net (77,983 ) - (2,533,732 ) - General and
administrative 1,647,041 1,821,731
5,481,813 5,247,932 Total operating
expenses 11,859,533 24,851,493
40,762,166 73,389,331 Loss from
continuing operations (2,193,332 ) (2,730,694 ) (4,296,365 )
(8,663,096 ) Other income (expense): Interest expense
(1,498,769 ) (1,910,496 ) (4,762,493 ) (5,037,908 ) Interest income
1,376 65,175 6,132 222,281 Other (6,003 ) 39,324
(158,904 ) 63,944 Other income
(expense), net (1,503,396 ) (1,805,997 ) (4,915,265 ) (4,751,683 )
Loss from continuing operations before
income taxes (3,696,728 ) (4,536,691 ) (9,211,630 ) (13,414,779 )
Income tax benefit - - -
- Loss from continuing operations
(3,696,728 ) (4,536,691 ) (9,211,630 ) (13,414,779 ) Income
(loss) from discontinued operations, net of taxes -
3,872,741 - (1,485,157 )
Net loss $ (3,696,728 ) $ (663,950 ) $ (9,211,630 ) $ (14,899,936 )
Loss per common share from continuing operations - basic and
diluted $ (0.43 ) $ (0.53 ) $ (1.08 ) $ (1.58 ) Earnings
(loss) per common share from discontinued operations - basic and
diluted $ - $ 0.46 $ - $ (0.17 ) Loss
per common share - basic and diluted $ (0.43 ) $ (0.07 ) $ (1.08 )
$ (1.75 ) Weighted average common shares outstanding
8,522,417 8,502,360 8,542,714
8,496,936
National Coal Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited) For the Nine Months Ended
September 30, 2010 2009 Operating
Activities Net loss $ (9,211,630 ) $ (14,899,936 ) Adjustments
to reconcile net loss to net cash (used in) provided by operating
activities: Loss from discontinued operations, net of taxes -
1,485,157 Depreciation, depletion, amortization and accretion
4,340,224 7,528,951 Amortization of deferred financing costs
882,899 688,438 Amortization of debt discount 571,875 500,323 Gain
on asset disposals, net (2,527,729 ) (74,789 ) Settlement of asset
retirement obligations (537,364 ) (41,469 ) Loss on extinguishment
of debt 153,060 - Stock option expense 785,123 1,126,961 Stock
issuance in exchange for services 62,000 - Changes in operating
assets and liabilities: Accounts receivable (102,355 ) (753,137 )
Inventory (2,426,231 ) (940,665 ) Prepaid and other current assets
991,102 678,192 Other non - current assets 133,673 158,155 Accounts
payable and accrued expenses 724,684 8,865,730 Deferred revenue -
(1,241,840 ) Other non - current liabilities 210,188
(196,198 ) Net cash flows (used in) provided by operating
activities from continuing operations (5,950,481 ) 2,883,873 Net
cash flows provided by operating activities from discontinued
operations - 3,676,903 Net cash flows
(used in) provided by operating activities (5,950,481 ) 6,560,776
Investing Activities Capital expenditures (1,227,979
) (5,445,127 ) Proceeds from sale of assets 14,029,512 - Change in
restricted cash 607,328 2,419,886 Additions to prepaid royalties
(74,620 ) (64,500 ) Net cash provided by (used in)
investing activities from continuing operations 13,334,241
(3,089,741 ) Net cash used in investing activities from
discontinued operations - (2,153,052 ) Net
cash provided by (used in) investing activities 13,334,241
(5,242,793 )
Financing Activities Proceeds under
short-term line of credit 1,500,000 5,000,000 Repayment of short
term line of credit (4,500,000 ) (1,000,000 ) Repayments of
long-term debt (977,439 ) (2,347,374 ) Repayments of obligations
under capital leases (1,202,768 ) (1,555,560 ) Payments for
deferred financing costs (253,041 ) (439,258 ) Net
cash flows used in financing activities from continuing operations
(5,433,248 ) (342,192 ) Net cash flows used in financing activities
from discontinued operations - (823,851 ) Net
cash flows used in financing activities (5,433,248 ) (1,166,043 )
Net increase in cash and cash equivalents 1,950,512 151,940 Cash
and cash equivalents at beginning of period 1,185,725
3,908,469 Cash and cash equivalents at end of period
$ 3,136,237 $ 4,060,409 Supplemental Cash Flow
Information Cash paid during the period for interest from
continuing operations $ 2,550,016 $ 2,810,643 Cash paid during the
period for interest from discontinued operations - 555,806 Non-cash
investing and financing activities from continuing operations:
Financed equipment acquisitions $ - $ 34,852 Equipment acquired
through capital leases - 336,000 Non-cash investing and financing
activities from discontinued operations: Financed equipment
acquisitions $ - $ 42,848 Asset retirement obligations incurred,
acquired or recosted - 324,332 Interest and fees paid in-kind or
financed at National Coal of Alabama, Inc. - 2,100,000 Accounts
payable assumed in asset sale transactions 6,612,605 -
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