Royal Coal needs restructuring to survive

TORONTO - Royal Coal Corp. (TSXV:RDA), a company which trades on the junior Canadian market and produces coal in the U.S. central Appalachian region, has withdrawn a planned financing and warns it may not survive unless it can restructure its debt and get new investment.

Shares were halted on the TSX Venture Exchange pending the news.

In a release late Wednesday, Royal Coal said it had withdrawn a planned financing of shares and warrants announced in mid-January "because it was not able to complete the offering under current market conditions."

The coal producer said it doesn't have enough money to meet its operating needs and debt servicing obligations and needs to restructure its debt to continue operating.

"In addition, price realizations from coal sales have been adversely affected by recent weak thermal coal prices," Royal Coal said.

"While the company is actively pursuing other sources of funds that may be available to fund such needs, additional financing may not be available to it or, even, if available, the terms of such financing might not be favourable to the company and might involve substantial dilution to existing shareholders.

"If the company fails to raise additional funds and restructure its existing debt it is doubtful that it will be able to continue as a going concern.

Royal Coal said it is delaying spending and changing its mine plan in the hopes of getting more production from its Big Branch Mine in eastern Kentucky.

Royal Coal is based in Toronto but is developing coal properties in West Virginia, Virginia, Kentucky, Ohio, and Tennessee.