NTEC gets loan, pays off Navajo Mine purchase
FARMINGTON — The Navajo Transitional Energy Co. has paid off the multi-million dollar loan it received from BHP Billiton to purchase Navajo Mine in December 2013.
NTEC officials said in an interview today that the tribal enterprise secured a $115 million loan – described as a "senior secured credit facility" in a company press release – from KeyBank, which is based in Cleveland, Ohio.
The "credit facility" consists of a $95 million term loan and a $20 million revolving credit commitment, according to the release.
NTEC spokesman Erny Zah said the revolving credit would be used to cover operational expenses.
In the NTEC release, company officials said securing the KeyBank loan ensures continued operation of the mine.
"NTEC has secured the (KeyBank loan) on our company's merit without having to seek the financial backing of the Navajo Nation," NTEC CEO Clark Moseley said in the release. "The term loan allows NTEC to continue executing its business plan and the revolving credit commitment will provide financial flexibility in the future."
At the time NTEC was purchasing the coal mine, BHP Billiton New Mexico Coal provided the finances needed to move the purchase forward, according to a BHP Billiton statement released today.
NTEC's board of directors approved the final KeyBank loan documents during a July 23 special meeting in Albuquerque, the documents were signed on July 26 and BHP Billiton was repaid on July 29, Zah said.
He said the BHP Billiton loan was originally financed for $85 million and the amount of money paid back "for now, will remain undisclosed."
The NTEC press release states that proceeds from the $95 million term loan were used to pay the remaining balance of the promissory note issued by BHP Billiton for the mine purchase and for fees and expenses associated with the transaction.
BHP Billiton stated it will continue to manage and operate the mine, located south of Fruitland, until the mine management agreement ends on Dec. 31.
"Repayment of the loan will, in no way, change the job status for employees at Navajo Mine, the business model by which the company operates or its adherence to BHP Billiton's charter values," the mining company release states.
Steve Grey, NTEC director of government affairs, said the terms for the KeyBank loan are confidential and there was no deadline for the tribal enterprise to repay BHP Billiton.
The loan demonstrates NTEC's ability to secure such financial agreements based on its "own merits" and without the assistance of the Navajo Nation, he said.
"NTEC always knew that once the financial community knew about the transaction that it would be able to stand on its own," Grey said.
On Dec. 27, 2013, members of the 22nd Navajo Nation Council voted 17-5 to authorize the mine purchase and the resolution was signed that same day by former tribal president Ben Shelly.
When tribal officials approved the acquisition, the plan was to pay off the BHP Billiton loan in three years, Zah said.
"This meets those original promises made by Navajo leaders," he said.
Noel Lyn Smith cover the Navajo Nation for The Daily Times. She can be reached at 505-564-4636.