Texas-based VHGI Holdings Inc. (OTC.QB: VHGI) announced Feb. 22 that its wholly-owned subsidiary, VHGI Coal Inc., has completed the acquisition of all of the stock of Lily Group Inc., which has the in-development Landree coal mine in Indiana.
In connection with this purchase, Lily Group has secured a $13m debt financing in order to refinance certain existing debt of the company, pay vendors, pay costs of the transaction and for short-term working capital purposes.
"This is an important step in the development of our business plan," said Doug Martin, CEO of VHGI. "Our initial goal was to complete this transaction in our Q1 of 2012, which we have accomplished. Our next goal is to close additional debt financings for Lily Group in order to pay-off certain indebtedness, exploit current mining operations and possibly acquire other coal mining opportunities.”
Rick Risinger, President of Lily Group, said: "This is exactly why we chose Mr. Martin and VHGI Coal to be our partners. They have the financial expertise and wherewithal to bring what we needed to develop our mine. We look forward to exploiting our opportunities at the Landree Mine, as well as other coal mining opportunities."
Martin thanked all the vendors and contractors for their patience throughout the construction phase of the Landree mine, which allowed VHGI to complete the financing while producing and shipping coal to customers.
The Landree deep mine, located in Greene County, Ind., has been listed with the U.S. Mine Safety and Health Administration since April 2010 under Lily Group. The mine was counted by MSHA as “nonproducing” as of Feb. 22, though workers were shown by MSHA as having been on-site in 2011.
In a November 2011 SEC filing, VHGI said that Lily Group has acquired all of the necessary permits to operate a small surface and underground mine. It has verified reserves of 21 million saleable tons and is in the process of optioning an additional 75 million tons. Lily has acquired the rights to mine 1,400 acres from Western Pocahontas Properties LP, in addition to the 1,400 acres owned by Lily. The Landree property is adjacent to a spur of the Indiana Rail Road Co., which will make transportation to markets worldwide accessible and cost effective, VHGI said in the SEC filing.