Walter Tumbles by a Third After Potential Bankruptcy ReportTim Loh
Walter Energy Inc., the coal producer whose market value has dropped by more than 99 percent in the past four years, plunged on news it could file for bankruptcy as soon as this month.
The shares tumbled by about a third to close at 30 cents in New York. It was the biggest decline since the stock started trading in 1995. The Birmingham, Alabama-based company’s market value slid to $24.2 million from $8.2 billion in July 2011.
Walter is expected to send a revised plan to first-lien lenders that includes a request for a debtor-in-possession loan that would allow the company to operate while in bankruptcy, Bloomberg News reported Friday, citing two people with knowledge of the discussions.
Walter’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 metallurgical coal has fallen by two thirds after Chinese demand cooled and Australia added new supplies. Patriot Coal Corp. filed for bankruptcy last month.
The fact that Walter could soon file for bankruptcy “should not be surprising,” Daniel W. Scott and Bryan C. Bergin, analysts at Cowen & Co., said in a note Monday. “Several coal management teams are faced with increasingly difficult decisions as coal market conditions show few signs of a nascent recovery.”
A spokesman for Walter declined to comment.