Royal Coal Corp.
TSX VENTURE : RDA

Royal Coal Corp.

September 10, 2010 16:02 ET

Royal Coal Corp. Announces Sale of Notes

TORONTO, ONTARIO--(Marketwire - Sept. 10, 2010) - Royal Coal Corp. (TSX VENTURE:RDA) ("Royal Coal" or the "Company") announces that it has exercised its right to issue additional notes pursuant to the terms of a note purchase agreement dated September 30, 2009 (as subsequently amended from time to time, the "Purchase Agreement") among the Company, Juno Special Situations Corporation ("Juno"), as agent and the noteholders from time to time party thereto. The proceeds of the note issuance will be used to fund its ongoing coal mining operations. Funding is expected to occur on or about September 10, 2010. As previously disclosed, Juno received all amounts loaned to the Company pursuant to the Purchase Agreement from an unrelated lender for the sole purpose of re-lending the funds to the Company on the same terms provided by the third party lender. 

In accordance with the terms of a notice and amendment (the "Amendment") to the Purchase Agreement, the Company will issue to Juno notes in the aggregate principal amount of US$1,000,000 for an aggregate purchase price of US$1,000,000. The notes initially bear interest from their applicable issue date at the rate of 23% per annum (after, as well as before, default or judgment), increasing to 33% per annum on the occurrence of and during the continuation of an event of default, payable in arrears in monthly installments. In connection with the Purchase Agreement, Royal Coal and Juno entered into a royalty agreement dated as of September 30, 2009 providing for, among other things, the payment to Juno of a US$2.00 per ton royalty interest (the "Royalty Interest") (which Royalty Interest is capped at the amount of indebtedness under the Purchase Agreement, which will be increased by US$1,000,000 as a result of the issuance of the additional notes) and a US$0.50 per ton royalty. Pursuant to the Amendment, Juno also granted the Company the option to issue additional notes in the aggregate principal amount of up to US$1,000,000 (in which case the Royalty Interest will be increased by a further $1,000,000), pursuant to a subsequent closing prior to October 1, 2010, subject to certain conditions.

In connection with the Company's exercise of its option to issue the additional notes, Juno exercised its corresponding right to issue additional notes pursuant to the terms of the note purchase agreement dated September 30, 2009 (as subsequently amended from time to time, the "TEC Purchase Agreement") among Juno, Third Eye Capital Corporation ("TEC") and the noteholders from time to time parties thereto. In accordance with the terms of a notice and amendment to the TEC Purchase Agreement, Juno will issue to certain noteholders notes in the aggregate principal amount of US$1,000,000 for an aggregate purchase price of US$1,000,000. Juno is obligated to pay the Royalty Interest received from the Company over to an existing noteholder (which Royalty Interest, as noted above, was increased by US$1,000,000). Juno will pay an over-advance fee of approximately US$97,581, which amount the Company shall reimburse to Juno. Royal Coal remains a guarantor of Juno's debt obligations to TEC, in respect of which Royal Coal has granted a general security interest over its assets.

About Royal Coal

Royal Coal is a coal exploration and production company, headquartered in Toronto, Ontario, Canada with a regional office in Hazard, Kentucky, U.S.A. whose primary business focus is developing producing surface coal mining operations in the Central Appalachian coal producing region of the United States, which includes parts of West Virginia, Virginia, Kentucky, Ohio, and Tennessee.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those currently anticipated due to a number of factors and risks. The forward-looking statements contained in this press release are made as of the date hereof and Royal Coal undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. 

TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Royal Coal Corp.
    Tom Griffis
    Chairman
    (416) 861-8775