Audley Capital said on Sunday it was concerned post-buyout of Canadian producer Western Coal earlier this year that Walter did not have the sufficient executive management needed to deliver on plans to earn highest-ever revenues in 2011 and ramp up production to 20 million tons annually by 2013.
Walter responded by pointing to both its increasing share price and the committed and experienced management team at the helm of the company.
“Walter Energy's share price has appreciated 310 per cent since January 1, 2007 and 75 per cent over the last 12 months, both among the highest returns of any global coal company,” it said.
“[Also] the company will continue to be led by an experienced senior management team,” it added, confirming that Joe Leonard had been appointed interim chief executive officer – a title he also held from February 2010 to April 2011.
US operations president Walt Scheller and Canadian and European operations president Neil Winkelmann will continue in their roles.
“Under this team's leadership, the company accomplished a number of key strategic initiatives, including the $3.3 billion acquisition of Western Coal on April 1, 2011 and the addition of 75 million tons of neighboring metallurgical coal reserves at the Company's Alabama operations,” Walter said.
The company is also continuing its search for a permanent CEO and had retained Spencer Stuart for the mission.
“The company and its board of directors welcome constructive dialogue with all of its shareholders and remain focused on continuing to create long-term shareholder value,” Walter said.
Audley said last weekend that, despite robust metallurgical coal fundamentals versus other commodities, it felt that Walter lacked the leadership to deliver confidently on its plans and take full advantage of the market opportunities.
The investor group said that the recent executive shakeup had left some perceiving that Walter had a lack of direction, a stigma which Audley said held Walter back “for some time” even before its Western Coal takeover and was weighing on the company’s share price.
The company also said it had made first contact with an investment bank with “preliminary interest” in exploring a partial of whole acquisition of Walter Energy.
“Given this feedback we believe that it is now in the interests of all shareholders of Walter Energy for the board of directors to retain an international investment bank, commence a managed sale process and provide due diligence access to interested parties without delay,” Audley said, adding that it had also been in touch with some of Walter’s large institutional shareholders who were supportive of a third-party approach at an appropriate price.