Photographer: Andrey Rudakov/Bloomberg

Apollo-Backed Warrior Said to Work With Banks on 2017 IPO

Updated on
  • Company said to seek valuation from $1 billion to $3 billion
  • Alabama coal company forged from former Walter Energy assets

Coal producer Warrior Met Coal LLC is working with bankers on a U.S. initial public offering for next year that could value the company at as much as $3 billion, according to people familiar with the matter.

The Apollo Global Management LLC-backed company is working with banks including Credit Suisse Group AG on the stock sale, which could happen as soon as the first half of 2017, said the people, asking not to be identified because the matter isn’t public. While volatility in coal prices has made it difficult to put a price on the company, it could be valued from $1 billion to $3 billion in an IPO, the people said.

Warrior joins Lexington, Kentucky-based Ramaco LLC in preparing to sell shares, said the people, amid a rapid rise in coal prices over the past year.

Spokesmen for Credit Suisse and Brookwood, Alabama-based Warrior declined to comment, as did Ramaco Chief Executive Officer Randall Atkins. A representative for Apollo didn’t respond to requests. 

Coal Rally

Metallurgical coal prices have soared about 300 percent this year to around $300 a metric ton, reversing five years of pain for miners of the steelmaking component. The rebound has been driven by increased imports to China, which has curtailed domestic production, as well as some supply issues in Australia.

The rally has breathed new life into the U.S. coal sector, helping fuel Arch Coal Inc.’s return from bankruptcy and spurring Peabody Energy Corp. to try paying off a loan early as it reorganizes.

Warrior is a producer and exporter of metallurgical coal for the global steel industry with mines across Alabama, according to its website. The company consists of the former core assets of Walter Energy Inc., which filed for bankruptcy in July 2015, with an operating capacity to mine about 8 million tons of coal a year from 300 million tons of recoverable reserves.

Walter’s bankruptcy filing was the first in a string of U.S. coal giants that sought protection from creditors, including Alpha Natural Resources Inc., Arch Coal Inc. and Peabody Energy Corp. Those companies placed big bets on metallurgical coal in 2010 and 2011, the last time that the commodity fetched more than $300 a metric ton.

In addition to Apollo, Ares Management, Caspian Capital, Fidelity Investments, Franklin Mutual Advisers, GSO Capital Partners and KKR Credit Advisors are backers of Warrior, which was formerly known as Coal Acquisition LLC, according to a bankruptcy filing.