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Last updated on April 24, 2014 at 17:35 EDT

Newlead Holdings Ltd. Announces Acquisition of Viking Mine in Kentucky, USA with 4,795 Mineral Acres and 20 Million Tons in Estimated Coal Reserves; Agreement to Acquire an Additional Mine and Coal Wash Plant in Kentucky; Update on Acquisition of the Five Mile Mine; Intention to Execute a Reverse St

September 18, 2013

PIRAEUS, Greece, Sept. 18, 2013 /PRNewswire/ — NewLead Holdings Ltd. (NASDAQ: NEWL) (“NewLead” or the “Company”) announced today that on Friday, September 13, 2013, the Company completed the acquisition of titles in the Viking Mine located in Kentucky, USA with 4,795 mineral acres containing approximately 20 million tons of estimated coal reserves. The Company expects to receive a reserve report compliant with the U.S. Securities and Exchange Commission (“SEC”) methodology within Q4 2013. The Company is already generating revenue from this mine and will negotiate deals with mineral rights holders on this property by Q2 2014.

The estimated reserves stated above are as determined by independent appraisals. The methodology used by the independent appraisers was not compliant with the methodology required by the Securities and Exchange Commission (“SEC”) in reserve reports and, accordingly, should not be relied upon. Such reserve information is only provided to give the best currently available information. NewLead is undertaking to obtain reserve reports that comply with the SEC methodology. Such reports may differ materially from the information provided herein.

The mine has an allocated purchase price of $4.0 million. A third party that owns the mineral rights on this property is asserting that the lease being acquired by NewLead has been terminated. However, the seller and NewLead believe that the lease is currently valid, because, among other reasons, the seller has been mining the property and paying the third party without incident. NewLead will continue to mine the property and will seek a settlement with such third party. However, if no settlement is reached by Q2 2014, the principal amount of the convertible notes will be reduced by $4.0 million which is mine’s allocated purchase price.

The Company further expects to complete the acquisition of another mine and a coal wash plant within Q3 2013. The coal wash plant covers 1,798 acres, is fully operational and will begin generating revenue immediately upon acquisition. Such acquisition is subject to a number of terms and conditions and there is no assurance it will be consummated.

Michael Zolotas, Chairman and Chief Executive Officer of NewLead, stated, “We are pleased to complete the agreement to acquire the two mines in Kentucky, and we continue to prospect for more mining acquisitions in the area. Through the mining business, we are developing a competitive, vertically integrated shipping and commodity company, building on our longstanding presence and experience in the international shipping industry.”

Michael Zolotas continued, “We would like to thank our financiers for investing in NewLead’s continued growth as well as our financial advisors for their valuable contribution and continued support in securing these deals in the current competitive markets.”

The aggregate acquisition price for the two mines and the coal wash plant is $68.0 million and is being funded as follows:

    --  $15.0 million Senior Secured Convertible Note issued with an 8% coupon,
        maturing on December 31, 2014 and convertible into equity at market
        price on each payment date at the sole discretion of the Company,
        subject to a true up based on the subsequent sales of such shares;
    --  $21.0 million Senior Secured Convertible Note issued with an 8% coupon,
        maturing on December 31, 2014 and convertible into equity at market
        price on each payment date at the sole discretion of the Company,
        subject to a true up based on the subsequent sales of such shares;
    --  $20.0 million from warrants, exercisable at $0.01, for 224,946,575 of
        Company's common shares;
    --  38,524,590 shares representing $5.875 million; and
    --  $6.125 million in cash.

Following the completion of the acquisition of the two mines and the coal wash plant, the Company will have a total of 669,107,689 common shares outstanding. This does not give effect to the convertible notes or warrants issued in the above transaction or other convertible notes or warrants outstanding.

Expected Acquisition of Five Mile Mine

As previously announced, NewLead has entered into a separate agreement for the acquisition of title and coal excavation rights for the Five Mile mine located in Kentucky, USA with 7,695 mineral acres. The Company has received a reserve report compliant with the U.S. Securities and Exchange Commission (“SEC”) methodology for the mine acquisition which states that the mine contains eight million tons in actual proven coal reserves.

The Company estimates that the mine will begin generating revenue in Q4 2013. The Company estimates that the acquisition will be concluded in Q4 of 2013, but the acquisition is subject to a number of terms and conditions and there is no assurance it will be consummated.

Intention to Execute a Reverse Stock Split to Regain NASDAQ Compliance

To regain compliance with the NASDAQ minimum bid price requirement, the Company intends to effect a reverse stock split of its common shares in a range between 10 and 20 shares to one. The Company anticipates announcing the final ratio of the reverse split before the opening of trading on October 1, 2013 and that the reverse split will become effective at the close of trading on October 15, 2013. The final ratio and amount of the reverse stock split will be determined based on prevailing market conditions and other relevant factors.

About NewLead Holdings Ltd.

NewLead Holdings Ltd. is an international, vertically integrated shipping and commodity company that manages product tankers and dry bulk vessels. NewLead currently controls two tanker vessels. NewLead’s common shares are traded under the symbol “NEWL” on the NASDAQ Global Select Market. To learn more about NewLead Holdings Ltd., please visit the new website at www.newleadholdings.com

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

This press release includes assumptions, expectations, projections, intentions and beliefs about future events. These statements, as well as words such as “anticipate,” “estimate,” “project,” “plan,” and “expect,” are intended to be ”forward-looking” statements. We caution that assumptions, expectations, projections, intentions and beliefs about future events may vary from actual results and the differences can be material. Forward-looking statements include, but are not limited to, such matters as the creditworthiness of our counterparties, the reliability of reserve reports, our ability to extract or acquire coal to fulfill contracts, the consummation of conditional contracts, future operating or financial results; our liquidity position and cash flows, our ability to borrow additional amounts under our revolving credit facility and, if needed, to obtain waivers from our lenders and restructure our debt, and our ability to continue as a going concern; statements about planned, pending or recent vessel disposals and/or acquisitions, business strategy, future dividend payments and expected capital spending or operating expenses, including dry-docking and insurance costs; statements about trends in the product tanker and dry bulk vessel shipping segments, including charter rates and factors affecting supply and demand; expectations regarding the availability of vessel acquisitions; completion of repairs; length of off-hire; availability of charters; and anticipated developments with respect to any pending litigation. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although NewLead believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, NewLead cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller to deliver one or more vessels, and other factors discussed in NewLead’s filings with the U.S. Securities and Exchange Commission from time to time. NewLead expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in NewLead’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

Investor and Media Relations:

Elisa Gerouki

NewLead Holdings Ltd.

Telephone: + 30 213 014 8023

Email: egerouki@newleadholdings.com

SOURCE NewLead Holdings Ltd.


Source: PR Newswire