Walter Energy Inc. will miss an interest payment to junior noteholders due in four days as it negotiates with creditors to restructure its debt.
The unprofitable coal producer will enter into a 30-day grace period starting June 15 on $19 million due to holders of its $388 million 9.875 percent unsecured note maturing in December 2020, the company said in a statement Thursday.
Walter’s plan to skip the coupon payment for now comes as it continues negotiations on a restructuring of its $3.1 billion debt load. The company is discussing how to structure a plan with senior creditors including Blackstone Group LP’s credit arm, Franklin Resources Inc. and Cyrus Capital Partners that would put it into bankruptcy as soon as this month, two people with knowledge of the discussions said last week.
William Stanhouse, a spokesman for Birmingham, Alabama-based Walter, said he had no comment beyond the press release.
Peter Rose, a spokesman for Blackstone’s GSO Capital Partners, and Ember Shmitt, a spokeswoman for Cyrus Capital, declined to comment. Rebecca Radosevich, a spokeswoman for Franklin, didn’t immediately provide a comment.
Walter would have to pay the interest due by July 15 in order to avoid giving those creditors the ability to file a notice of default.
The company used the grace period on its last interest payment due April 15, electing to pay holders of two notes on May 15, according to a May 7 statement.
The 9.875 percent note last traded at 5 cents on the dollar including trades of all sizes, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The metallurgical coal producer’s value soared four years ago, following its debt-fueled acquisition of Western Coal Corp. for about $3 billion. Since then, the benchmark price of the commodity has fallen by two thirds after Chinese demand cooled and Australia added new supplies. Patriot Coal Corp. filed for bankruptcy last month.
The Birmingham, Alabama-based company’s shares have tumbled by a third since last week, closing at 30 cents Wednesday. They closed as high as $141 in 2011.