Alpha Natural Resources Inc.’s convertible notes rose the most in four weeks after the second-largest U.S. coal producer announced a tender offer for some of the debt.
Alpha’s $658.7 million of 3.25 percent convertibles due August 2015 climbed 4.4 cents to 92.6 cents on the dollar at 11:29 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The securities yielded 6.13 percent.
The coal miner is seeking to buy as much as $350 million of the notes for 94 cents on the dollar, if the debt is tendered by Oct. 11, the Bristol, Virginia-based company said today in a statement distributed by PR Newswire. The offer expires Oct. 25.
The conversion price on the securities is $85.16, according to data compiled by Bloomberg. The shares rose 2.4 percent to $6.75 in New York.
Alpha is seeking to issue $500 million of debt to fund the tender offer, the company said in another statement.
U.S. coal producers have struggled with a warm winter and low natural-gas prices damping demand for thermal coal burned at electricity generators and slowing growth in China, the biggest steelmaker, sapping demand for metallurgical coal used to produce the alloy.
Standard & Poor’s lowered its ratings on Alpha, including its corporate credit rating by one level to B+, four levels below investment grade, from BB-, the agency said in a statement today.
“Although leverage metrics will remain outside of our rating expectations for the next year to two years, the company’s liquidity is strong to weather the downturn,” S&P said in the statement. “We believe the current downturn in coal is cyclical rather than secular.” The agency removed Alpha from CreditWatch, where it had been since Sept. 19.
Peabody Energy Corp. is the largest U.S. coal producer by sales.