The proposed asset sales is the most recent devlopment for struggling Walter, which had already been busily staying in survival mode through through the first half of 2013.
In April it won a proxy battle against London-based hedge fund Audley Capital Advisors LLP and in June it scrapped plans to refinance its credit facility. Just two weeks ago, on July 24, Walter elected to amend covenants related to its $2.75 billion credit facility after cancelling plans to refinance in June. The new agreement included the addition of a $225 million minimum liquidity requirement and a number of leverage ratio covenants that affect the interest rates on the debt. It was the fifth time Walter had amended the facility since it entered into it in April 2011.
Walter, which has operations in the U.S., Canada and the United Kingdom, also said Thursday that it would reduce its capital spending target to $150 million for the year. In May, it cut its capex target to $170 million from $220 million.
According to Harvey, the company could also look to issue new debt to meet liquidity requirements in addition to asset sales and a reduction of expenditures.
"I think the key message is we are action oriented and we're going to make progress and we're going to move very decisively and quickly," said Harvey on the call.
While metallurgical coal, which is used to produced steel, continues to lag due to decreased demand in Europe and slowed growth in China, some companies have had recent success selling coal assets.
On June 28, St. Louis-based
agreed to sell coal mining subsidiary
to closely held Louisville, Ky., mine operator
for $435 million in cash.
, the largest publicly traded U.S. coal company by market capitalization, is also selling various coal assets as it looks to offset recent revenue declines due to fluctuating coal prices. Consol's chief executive J. Brett Harvey told investors July 25 that the company was close to selling assets, believed to be domestic coal plays, in the third quarter.
In January, Consol said it had sold nonproducing western Canadian coal assets for $127 million in two separate transactions. Ontario's Ram River Coal Corp. paid $102.5 million to acquire all of Consol's Ram River and Scurry Ram coal properties in Ontario, while Sydney-based Riversdale Resources purchased the company's coal assets in the Grassy Mountain surface mine in Alberta for $24 million.