UPDATE 1-International Coal says amends credit agreement

* Says deal amended to avoid non-compliance of covenants

* Expects to be in compliance of covenants going forward

Sept 29 (Reuters) - International Coal Group Inc (ICO.N) said it has agreed with its lenders to amend a credit agreement to address certain covenants scheduled to tighten in 2010.

Concerns on meeting the step-up in covenant requirements of its $100 million credit facility have risen, following the recent drop in coal demand and pricing, the company said in a statement.

"We expect to be in full compliance with our covenants going forward," Chief Executive Ben Hatfield said.

International Coal, which did not disclose the terms of the amendment, said it now has $26.4 million in borrowing capacity under the credit facility, with $73.6 million used for letters of credit issued to support reclamation bonds and other bonding requirements.

Shares of the company were down 1 percent at $4.11 Tuesday morning on the New York Stock Exchange. (Reporting by Antonita Madonna Devotta in Bangalore; Editing by Unnikrishnan Nair)