National Coal will issue stock for $2 million-$10 million of 10½% notes under private agreement

By Angela McDaniels

Tacoma, Wash., May 27 - National Coal Corp. will issue common stock in exchange for $2 million to $10 million of its 10½% senior secured notes due 2010, according to an 8-K filing with the Securities and Exchange Commission.

The company said it will issue the stock under a letter agreement reached on May 20 with Neuberger Berman, LLC, which is representing some of its clients who hold the notes.

For each $1,000 principal amount of notes, the holders will receive a number of shares equal to the quotient of (a) $900 plus accrued interest divided by (b) $6.81.

Settlement will occur on or before June 3 and may occur in partial amounts on multiple dates, the filing noted.

The notes were sold as part of a $55 million issue of units in December 2005. Each unit included one note and one warrant to purchase about 31.5 shares of the company's stock at $8.50 per share.

The Knoxville, Tenn.-based coal producer struck a similar deal with Neuberger Berman in February. Under that agreement, National Coal said it would issue stock in exchange for $2 million to $10 million of the notes, and the number of shares issued per note was equal to 82% of par plus accrued interest divided by $4.85.

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