This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The Deal: Walter Energy Weighs Asset Sales as Coal Revenues Decline

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 Arch Coal (ACI) agreed to sell coal mining subsidiary Canyon Fuel to closely held Louisville, Ky., mine operator Bowie Resources for $435 million in cash.

Consol Energy (CNX), 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.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
WLT $0.62 0.00%
AAPL $124.43 0.00%
FB $82.22 0.00%
GOOG $548.00 0.00%
TSLA $188.77 0.00%

Markets

DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs