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Walter Energy restructuring

Published by
World Coal,

A leading metallurgical coal producer for the global steel industry, Walter Energy, is considering restructuring plans. It has entered into an agreement with certain of its senior lenders on the material terms of a restructuring.

To implement this pre-negotiated restructuring, Walter Energy and its US subsidiaries have filed for relief under chapter 11 of the US Bankruptcy Code in the Bankruptcy Court for the Northern District of Alabama. The company’s operations outside of the US, such as those in Canada and the UK, are not included in the filings.

It has made customary filings, including first day motions, with the US Bankruptcy Court, which, if granted, are intended to help facilitate a smooth transition into the reorganisation process without business disruption. The motions are expected to be addressed promptly by the Court.

"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," commented Walt Scheller, the company’s CEO. "With the support of our key senior lenders, we will use this process to pursue the best possible outcome on behalf of all of our stakeholders, including our employees and our communities. In the face of ongoing depressed conditions in the market for metallurgical coal, we must do what is necessary to adapt to the new reality in our industry."

The terms of the restructuring have the potential for the senior lenders to change over all of their debt into equity. The agreement also establishes a timeline for confirmation of a chapter 11 plan and the fulfilment of certain other conditions and milestones. If the company cannot satisfy the various conditions and milestones or confirm a chapter 11 plan, it will commence a sale of substantially all of its assets through a court-supervised auction process.

Walter Energy has indicated it has sufficient cash to ensure that vendors, suppliers and other business partners will be paid in full for goods and services provided during the reorganisation process.

Edited from press release by Harleigh Hobbs

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