Photo by: Bloomberg
TORONTO (miningweekly.com) – US coal company Walter Energy has reached a restructuring agreement with its senior lenders under Chapter 11 bankruptcy protection.
Coal miners across the globe had, since 2011, been dealing with falling coal prices, a global supply glut and competition from cheap natural gas, which had forced cash-strapped miners to idle unprofitable mines and retrench thousands of miners.
"This restructuring plan provides a roadmap for Walter Energy to establish a sustainable capital structure, make further changes to operational cost drivers and ensure that the company can continue to operate safely and competitively in the years ahead," CEO Walt Scheller said on Wednesday.
To implement this prenegotiated restructuring, Walter Energy and its US subsidiaries had filed for relief under Chapter 11 of the US Bankruptcy Code, in the Bankruptcy Court for the Northern District of Alabama. Walter Energy's non-US operations, including those in Canada and the UK, were not included in the filings.
Walter Energy, which had coal mines in Alabama and West Virginia, said the terms of the restructuring assumed senior lenders would convert all of their debt into equity.
Birmingham, Alabama-based Walter Energy warned in May that it would have to seek bankruptcy protection if it failed to restructure its debt.
According to a regulatory filing with the Securities and Exchange Commission, Walter Energy had debt of $3.02-billion as of March 31.
Walter Energy had enough cash to assure that vendors, suppliers and other business partners would be paid in full for goods and services that they provided during the reorganisation process.
The company's bankruptcy filing came months after Patriot Coal's second Chapter 11 filing in May. Patriot filed for bankruptcy protection just 18 months after emerging from its previous Chapter 11 and was in negotiations with a potential buyer.
Walter Energy, which had failed to turn a profit for the last two years, in February said it expected a 10% drop in metallurgical coal sales in 2015, citing sluggish Chinese and European demand.