Walter Energy Plans to File for Bankruptcy
Walter Energy Inc. is preparing to file for bankruptcy protection this week after agreeing on a fast-track restructuring process that would hand ownership of the coal miner to senior creditors, according to people familiar with the matter.
The company, which has been battered by a sharp drop in coal prices, plans to swap its senior creditors’ debt for ownership of the company in a chapter 11 restructuring that would largely wipe out junior creditors and reduce labor and pension costs, the people said.
On Tuesday afternoon, Walter and a group of senior bond and loan holders were finalizing an agreement that would allow the company to use cash pledged as collateral to fund its operations in bankruptcy, the people added. Walter had $434.7 million in cash as of March 31, according to a regulatory filing.
The details of such plans can change at the last minute as companies and investors finalize agreements. Walter may face opposition from junior creditors, labor interests and other stakeholders seeking to protect their interests as it restructures.
Walter in May warned that it might consider a chapter 11 bankruptcy filing if it couldn’t restructure its $3 billion debt load out of court. It skipped a bond interest payment last month, entering a 30-day default grace period that expires Wednesday.