Audley Capital Comments on ISS Report Regarding Walter Energy

  Audley Capital Comments on ISS Report Regarding Walter Energy

  Urges Stockholders to Vote “FOR” ALL of Audley Capital’s Highly-Qualified
                   Director Nominees on the GOLD Proxy Card

Business Wire

NEW YORK -- April 15, 2013

Audley Capital Advisors LLP (including certain related funds and investment
vehicles, “Audley Capital”) today issued the following statement regarding the
report on Walter Energy, Inc. (NYSE: WLT) (TSX: WLT) (“Walter Energy” or “the
Company”) issued by Institutional Shareholder Services (“ISS”) on April 12,
2013. Audley Capital is continuing to urge stockholders to vote FOR its five
nominees for election to the Board of Directors at the Company’s upcoming 2013
Annual Meeting of Stockholders on April 25, 2013.

“ISS, and its peer Glass Lewis, both recognize the significant operational and
financial issues at Walter Energy. Unfortunately, they buy into the Company’s
argument that declining metallurgical coal prices are to blame instead of
recognizing that many of these problems are self-inflicted,” said Julian
Treger, Managing Partner of Audley Capital Advisors. “From the beginning, we
have maintained that we are giving stockholders a choice. Stockholders can
choose to change nothing and continue on with a Board that has made excuses,
missed tremendous value creation opportunities, failed to expand into new
growth markets, continued to stress the balance sheet and pinned its hopes on
met coal price recovery. Or, instead, stockholders can choose to elect our
slate of individuals with broad global industry and capital markets experience
that would elevate the skill level of the Walter Energy Board and seek
initiatives to accelerate a stabilization of the Company and position it for
far superior value creation in the face of a sustained recovery in met coal
pricing.”

Added Treger, “Stockholders are encouraged to look at each and every director
nominee put forward and judge who can serve them best. We believe we have put
forward truly dynamic individuals that have created tremendous value as
operators, fiduciaries and investors. This is not a statement the current
Board can make regarding the disappointing record of Walter Energy. We are
optimistic that stockholders, tired of their underperforming investment, will
support change and elect Audley’s nominees on April 25, 2013.”

In its analysis ISS stated*:

  *“There is no question that Walter Energy has performed poorly on an
    absolute basis over the most recent cyclical downturn in the coal
    industry.”
  *“When compared to a global index of metallurgical coal producers compiled
    by Bloomberg, Walter Energy underperforms the index over the three year
    period…”
  *“Walter Energy seemed to track the price of metallurgical coal fairly
    closely until April 2011, when it acquired Western Coal. Since then,
    Walter Energy’s decline has outpaced the decline of metallurgical coal
    prices, perhaps due to the increased financial leverage it took on in the
    acquisition. Walter Energy fully wrote off the acquisition’s goodwill in
    November 2012 with a $1.1 billion impairment charge.”
  *“The dissident believes that the board has done a poor job of managing its
    costs. This is particularly evident in its administrative expenses, which
    in total are high relative to peers but extremely high on a per-ton basis,
    which the dissident believes is a more appropriate metric. The difference
    is striking: a $9.00 cost per ton at Walter compares to a $1.31 average
    cost.”

Audley Capital agrees with ISS's criticisms of the current Board in these and
other respects. But Audley Capital also emphasizes that ISS's analysis does
not entirely capture a huge part of the losses that Walter Energy shareholders
have suffered recently because portions of its report only measure the
Company’s stock performance through February 19, 2013 – following Walter
Energy’s self-selected reference point. This ignores that, between February
19th, 2013 and April 12th, 2013, the Company’s stock price has decreased a
startling 40% – erasing almost $1 billion in market capitalization. Audley
Capital believes this enormous destruction of shareholder value and share
underperformance against peers was driven in part by the higher interest
burden voluntarily taken on by the Company.

Audley Capital’s director nominees include individuals with extensive
experience in the metallurgical coal industry on an international basis and
possess the skills required to manage multi-jurisdictional coal operations and
their financing.

Audley Capital urges stockholders to vote FOR its five director nominees by
immediately completing and returning their GOLD proxy card or by submitting
proxies by telephone or through the Internet. Investors that need assistance
or have any questions or need assistance voting your shares, please call our
proxy solicitor, Okapi Partners LLC, at (877) 208-8903.

* Permission to quote from the ISS report was neither sought nor obtained.

Additional Information

Further information regarding the director nominees and other persons who may
be deemed participants, and other matters, are set forth in a definitive proxy
statement filed with the Securities and Exchange Commission (“SEC”).
SHAREHOLDERS OF THE COMPANY ARE STRONGLY ADVISED TO READ THAT PROXY STATEMENT,
BECAUSE IT INCLUDES IMPORTANT INFORMATION. THE PROXY STATEMENT IS BEING SENT
TO SHAREHOLDERS BY OR ON BEHALF OF PARTICIPANTS, AND IS ALSO AVAILABLE AT NO
CHARGE ON THE SEC’S WEBSITE AT http://www.sec.gov.

Contact:

Investors:
Audley Capital Advisors LLP
Julian Treger, +44 20 7529 6900
Managing Partner
or
Okapi Partners LLC
Bruce Goldfarb/Charles Garske/Patrick McHugh
212-297-0720
or
Media:
Sard Verbinnen & Co
Dan Gagnier/Brian Shiver
212-687-8080
 
Press spacebar to pause and continue. Press esc to stop.