NEW YORK (TheStreet) -- Goldman Sachs lowered Walter Energy's (WLT) six-month price target to $9 from $10 and maintained a "neutral" rating on the coal producer's stock.
The downgrade comes after Walter Energy offered $200 million of 9.5% senior accrued notes due in 2019 and another $350 million senior accrued toggle notes due in 2020 in an effort to raise capital to pay down debt.
"WLT raised $200 mn of senior secured debt due 2019 and $350 mn of second lien PIK toggle notes due 2020. The financing reduces near-term credit risk, but raises interest expenses by $30-40 mn, weighing on free cash flow," Goldman Sachs said. "We lower our WLT 6-month price target from $10 to $9 reflecting a higher cash flow burn and higher risk for equity financing needs later this year."
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Walter Energy was trading at $7.57 on Monday.
TheStreet Ratings team rates WALTER ENERGY INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate WALTER ENERGY INC (WLT) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk."