Alpha Natural Resources Inc. will limit new borrowing because the miner has enough cash on hand and expects coal export growth to increase global sales, Chief Financial Officer Frank Wood said in a telephone interview.
ANR has $900 million in cash and a revolving credit facility of about $1 billion to deal with any “headwinds” it may face in 2013, while metallurgical coal production should remain almost at 2012 levels, Wood said on Nov. 9. ANR is not planning to do any refinancing before its nearest maturities in 2015, he said. It has $824 million in convertible bonds due that year, according to data compiled by Bloomberg.
“We have the ability to go to our revolver and borrow at very little notice,” Wood said. “Right now, I think we feel very good with our cash,” he said. “As we get closer to 2015, obviously we’ll be looking at those options again.”
A decline in revenue because of lower metallurgical coal shipments has diminished earnings before interest, taxes, depreciation and amortization, said Evan Mann, a research analyst at Gimme Credit LLC. The ratio of debt to Ebitda rose to 3.6 times in 2011 from 1.4 times the previous year, while Mann expects it to get as high as 5.75 times by late 2013, the most since its public offering in 2005, Bloomberg data show.
“We have a large amount of export capability, which will allow us to grow met coal over time,” said Wood, declining to comment on debt-to-Ebitda projections. “I’m not worried at the moment about how an analyst might be projecting our overall leverage ratio.”
Wood said he is more concerned with the company’s secured net debt to Ebitda, which he said is 0.1 times and can rise to as high as 2.5 times. That number accounts for $555 million in senior secured loans, minus $500 million in cash the company is allowed to credit against outstanding secured debt, ANR said. Alpha Natural will benefit from increasing its exports of thermal coal internationally, Wood said.
“We feel that while the U.S. market impacts us, we’re much more, in terms of growth mode for the future, tied to growth margins across the globe,” he said.
In a revolving credit facility, money can be borrowed again once it’s repaid.