Coal news and updates

US met coal miner Walter seeks $1.9 billion debt equity swap

US coking coal miner Walter Energy, in Chapter 11 bankruptcy since July 15, is pursuing a $1.9 billion debt for equity swap and labor cost cuts to allow operations to continue, according to court documents.

Walter is seeking to confirm its reorganization plan by January 2015, allowing it to emerge from Chapter 11 "as going concerns with substantially the same assets and corporate structure" as prior, said a document filed late Wednesday to the US Bankruptcy Court for the Northern District of Alabama, Southern Division.

"Confirmation of the plan depends on the debtors' ability to materially reduce their legacy labor liabilities and existing labor costs. Thus, the debtors will engage in negotiations with the United Mine Workers of America (which represents approximately half of the Debtors' workforce), among other parties," it said.

"The debtors' ongoing and legacy labor costs are substantial and, under current and projected market conditions, unsustainable."

Walter sent Worker Adjustment and Retraining Notification (WARN) notices to all union and salaried employees at its No. 4 mid-vol HCC mine in Brookwood, Alabama, on July 31.

This followed WARN notices on May 18, sent to some employees of Jim Walter of the anticipated reductions in force at the No. 7 low-vol mine, the No. 5 Mine Preparation Plant, and the Central Shop.

Walter produced 7.7 million mt of met coal from the US in 2014. Production at the West Virginia-based Maple mines was recently curtailed due to weak market conditions and the Gauley Eagle mines were shut for since 2012 and classified for sale, it said.

The debt-to-equity swap would convert around $1.9 billion of Walter's pre-petition secured debt and in exchange for the cancellation of pre-petition secured claims, the holders of first lien other debt claims will receive reorganized Walter Energy's common stock on a pro rata basis on a yet to be determined ratio to total shares.

source: http://www.platts.com