Westmoreland Forms Absaloka Coal LLC To Monetize Tax Creditsadmin
Westmoreland Coal Company announced that its Westmoreland Resources, Inc. subsidiary, which owns and operates the Absaloka Mine, has formed Absaloka Coal, LLC and partnered with an East Coast financial institution. Absaloka Coal will serve as the producer and seller of coal leased from the Crow Indian Tribe in Montana, and will benefit from Indian Coal Production Tax Credits available through Section 45(e) of the Internal Revenue Code provided under the Federal Energy Policy Act of 2005. Based on current forecasts of future production, the usage of the tax credits is expected to result in net pre-tax cash flows to Westmoreland of approximately $37 million through 2012. The transaction is subject to receipt of a favorable private letter ruling from the U.S. Internal Revenue Service to confirm the qualification for the credits, and other contingencies.
D.L. Lobb, Westmoreland’s President and CEO, commented: “This cooperative transaction is a very unique opportunity that will benefit all parties involved. Westmoreland’s tax position has limited the benefit from the Indian Coal Production Tax Credits and a significant portion of the credits would expire unused. The Company recognized the need for an appropriate financial structure with a partner who had demonstrated success in similar tax credit arrangements. Today’s transaction provides the tool that we hope will allow more value of the credits to be realized. I want to recognize the long-standing relationship between Westmoreland and the Crow Tribe and the Tribe’s efforts to facilitate this transaction.”
“We will work diligently to pursue the necessary ruling, as well as continue to analyze potential improvements at the Absaloka Mine that could further increase the production of coal and therefore the tax credits available. However, while we believe that our private letter ruling request is reasonable, we cannot guarantee that the IRS will issue a favorable response,” added Lobb.
Westmoreland Coal Company is the oldest independent coal company in the United States and a developer of highly clean and efficient independent power projects. The Company’s coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. Westmoreland is dedicated to meeting America’s dual goals of low-cost power and a clean environment. For more information visit www.westmoreland.com.