Walter Delays Bond Payments After Coal SlumpTim Loh
Walter Energy Inc., a U.S. producer of coal used to make steel, will delay about $62 million in interest payments due to bondholders Wednesday as it faces lower commodity prices and slack demand.
The company will postpone the payments by taking a 30-day “grace period” under its indenture agreements with holders of its 9.5 percent senior secured notes due 2019 and its 8.5 percent senior notes due 2021, according to a filing Wednesday with the U.S. Securities and Exchange Commission.
The company has struggled after a plunge in the price of metallurgical coal following a slowdown in demand in China, the world’s largest producer of steel. With the commodity’s price at its lowest point in six years, the Birmingham, Alabama-based company has been looking to cut costs and it scrapped its dividend in January.
The move “does not reflect a current liquidity issue” as Walter had about $435 million of cash and investments at the end of March, according to the filing. Walter said it is working with bondholders “to weather a highly competitive and challenging market.”
Shares fell 1.6 percent to 64 cents at 9:35 a.m. in New York. Walter is down 92 percent in the past year.
Walter’s $970 million of 9.5 percent first-lien notes rose 1.5 cents to 59 cents on the dollar at 9:12 a.m., according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.