Walter in lender talks

WALTER Energy is in talks with lenders to discuss the possibility of making amendments to its credit facility.
Walter in lender talks Walter in lender talks Walter in lender talks Walter in lender talks Walter in lender talks

Courtesy Walter Energy.

Staff Reporter

The coal producer said in a Securities and Exchange Commission filing on Tuesday that it was negotiating an amendment to its debt covenants that could see its dividends cut.

“These amendments, if agreed upon by the company and its lenders, could, among other things, modify and/or suspend certain covenants, add new covenants, increase the interest rate, modify the capacity for additional unsecured or junior secured debt incurrence, require the payment by the company of customary consent fees and/or require the reduction of the company’s common stock cash dividend to a nominal amount,” Walter said Tuesday.

The Birmingham, Alabama-based company has been struggling to manage its growing long-term debt, which it reported to be about $2.6 billion as of March 30, at which time it had cash balances of about $236 million.

Around the same time, Walter won a proxy battle against shareholder Audley Capital Advisors, a British hedge fund. Audley, among other things, accused Walter of taking on too much debt at punishing interest rates.

The company's $450 million senior note offering, which closed in March, had an 8.5% coupon.

In June, the company said in an SEC filing that it had begun exploring refinancing options.

Walter said it was making the move to help “increase its financial flexibility” and would use the proceeds from such a transaction to repay its outstanding debt and any related fees or expenses.

A few weeks later, Walter announced it would not be refinancing a portion of its existing debt.

"The company has no material debt principal payments due until 2015, and it requires no incremental funding at this time," it said.

Walter Energy’s stocks have a one-year low of $9.88 and a one-year high of $41.32.

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