Each one in plain English, with the numbers worked through for a shareholder.
1 Apr 2016asset acquisition disposition▼ BadMajor
The sale of substantially all Walter's Alabama assets closed on Mar 31, 2016 to Warrior Met Coal, LLC (formerly Coal Acquisition LLC), for about $5.4 million cash, a credit bid of about $1.15 billion of first-lien debt (reduced from the $1.25 billion originally agreed), and assumed liabilities. This completes the November 2015 stalking horse deal. The company and other debtors now say they have no further material business operations and are evaluating a wind-down of remaining assets. All directors except William G. Harvey and all officers resigned, including CEO Walt Scheller and General Counsel Earl Doppelt; Harvey became sole director and holds the president, secretary, treasurer, CFO and executive VP roles. Bylaws now require a minimum of one director. The press release says Walter Canada (assets in Canada and the UK) has been under Canadian creditor protection since Dec 7, 2015. This filing does not state any distribution to common shareholders.
On Feb 8, 2016 Walter entered a new debtor-in-possession loan of up to $50 million with Citibank, N.A. as agent, for working capital and bankruptcy costs. It bears 12% interest payable in cash at termination, carries a $3.75 million upfront fee (7.5%), a put option premium and a 2.5% drawdown fee, and ranks ahead of other claims. It matures Feb 29, 2016, with extensions tied to closing the 363 sale. This funds the company through the asset sales described earlier, and the filing again says common holders are contemplated to get no distribution.
On Jan 31, 2016 Walter signed a second sale agreement, with Seminole Coal Resources, ERP Compliant Coke and ERP Environmental Fund (affiliates of ERP Compliant Fuels / Virginia Conservation Legacy Fund), covering substantially all its remaining U.S. assets after the Coal Acquisition sale. The press release names the West Virginia properties (Gauley Eagle, Maple) plus Walter Coke and Taft in Alabama. The buyers pay by assuming liabilities; no cash price is stated. Canadian and UK assets are excluded. The sale needs court approval and must close by Feb 29, 2016 (extendable up to 30 days). The filing repeats that common holders are currently contemplated to receive no distribution.
On Nov 5, 2015 Walter signed a 'stalking horse' (opening bid, open to higher offers) agreement to sell substantially all its Alabama assets to Coal Acquisition LLC, a company formed by members of its senior lender group, for about $5.4 million cash, a credit bid of about $1.25 billion of first-lien debt, and assumption of certain liabilities. This is the Section 363 asset-sale route that the July 2015 Restructuring Support Agreement allowed as an alternative to the debt-to-equity plan. The filing says a 363 sale would cause the common stock to lose substantial value and that common holders are currently contemplated to receive no distribution. Closing is subject to court approval and labor-contract conditions, and is required by Feb 29, 2016 (extendable up to 30 days).
On July 30, 2015 the NYSE filed Form 25 with the SEC to remove Walter's common stock from listing, effective at the opening of business on August 10, 2015. The stock trades on the OTC Pink market as 'WLTGQ'. This completes the delisting begun July 8.
On July 15, 2015 Walter and certain US subsidiaries filed Chapter 11 in the Northern District of Alabama; Canadian and UK operations are not included. A Restructuring Support Agreement with some first-lien lenders and noteholders provides for a debt-to-equity conversion of the credit agreement and 9.500% first-lien notes under a plan, with use of cash collateral for up to seven months. If plan milestones are missed, those creditors can force a sale of substantially all assets instead. The filing accelerated about $978.2M of term loan, $388.0M of 2020 notes, $383.3M of 2021 notes, $970.0M of first-lien notes and $360.5M of second-lien notes. The filing does not say what happens to common shareholders, though converting first-lien debt to equity suggests (inference) they are at serious risk of being wiped out or heavily diluted.
On July 8, 2015 the NYSE suspended trading in Walter's stock and began delisting proceedings, saying the price was 'abnormally low'. The company does not intend to appeal. The stock began trading on the OTC Pink market as 'WLTG' on July 9. This escalates the March 2015 below-$1 notice.
On March 5, 2015 the NYSE told Walter its stock's 30-day average closing price had fallen below the $1.00 minimum. It has six months to regain compliance; trading continues on the NYSE with a '.BC' marker. The company warned that delisting could hurt liquidity and its access to capital markets.
Walter agreed to issue 8,650,000 new shares to one noteholder in exchange for $66.725 million of its 8.5% senior notes due 2021, which will be retired and cancelled with no cash received. This extends the debt-for-stock swaps from the 2020 notes to the 2021 notes, and dilutes existing shareholders.
Walter agreed to issue 3,900,000 new shares plus $5.2 million in cash to two noteholders in exchange for $52 million of its 9.875% senior notes due 2020, which will be retired and cancelled. This is the largest of the 2020-note swaps so far and further dilutes shareholders, while paying cash to retire the notes.
Walter agreed to issue 2,250,000 new common shares to one noteholder in exchange for $25 million of its 9.875% senior notes due 2020, which will be retired and cancelled, with no cash received. This continues the debt-for-stock swaps begun in April 2014 and dilutes existing shareholders somewhat.
14 July 2014security holder rights change● NeutralMajor
On July 14, 2014 Walter issued another $320.0 million of its 9.500% first-lien notes due 2019, bringing the series to $970.0 million (sum of the $450M, $200M and $320M issues). It drew about $298.1 million on its revolver, and used the net note proceeds to repay all revolver borrowings other than letters of credit, ending the lenders' revolving commitments except for those letters of credit. The notes are secured by substantially all assets ahead of the second-lien notes, and the indenture limits dividends. This follows the Seventh and Eighth Amendment conditions (the Eighth Amendment's effectiveness is not confirmed here).
Walter obtained lender consent on July 7, 2014 to a Seventh Amendment of its credit agreement, which makes the financial maintenance ratio unlimited for the quarter ended June 30, 2014 provided it issues at least $275 million of additional first-lien notes within seven days (or a longer period set by the agent). On July 8 it signed an Eighth Amendment adding a $61.2 million revolver tranche maturing 2017, bringing total revolving commitments to $375 million, effective only if it prices a bond offering of at least $275 million. This continues the string of credit amendments that followed the Sixth Amendment in March.
Walter agreed to issue 3,150,000 new common shares to one noteholder in exchange for $35 million of its 9.875% senior notes due 2020, which will be retired and cancelled. No cash comes in; the company says the aim is to reduce debt and interest cost and it may do more such exchanges. For shareholders this means some dilution, and it follows the company's earlier debt-raising in 2013-2014.
On March 27, 2014 Walter issued $350.0M of 11.0%/12.0% senior secured second-lien PIK toggle notes due April 1, 2020 under a new Wilmington Trust indenture. It can pay interest all in cash at 11.0%, or part in additional notes at 12.0% on the PIK portion. It also issued a further $200.0M of its 9.500% first-lien notes due 2019 under the September 2013 indenture. All of this is secured by substantially all of its assets, with the second-lien notes ranking behind the credit agreement and first-lien notes. This appears to be the junior capital that the Sixth Amendment required, though the excerpt does not say so. The excerpt does not show the use of proceeds, and the indenture limits dividends and other payments.
On March 18, 2014 Walter obtained majority-lender consent to a Sixth Amendment of its $2.725B credit agreement. It lets Walter repay Term Loan A without repaying Term Loan B pro rata, extends 81.6% of revolver commitments to October 2017 (those lenders' commitments cut by 20%), eliminates the liquidity and fixed charge coverage covenants, modifies the secured leverage covenant, and adds 0.50% to the Term Loan B interest rate. Most changes only take effect if Walter issues at least $350M of additional junior capital and repays Term Loan A in full. This replaces the minimum liquidity covenant set in the Fifth Amendment of July 2013.
30 Sept 2013security holder rights change● NeutralMajor
On September 27, 2013 Walter issued $450.0M of 9.500% senior secured notes due October 15, 2019. They are secured on a first-priority basis by substantially all of Walter's and its guarantor subsidiaries' assets, equally with the credit agreement. Proceeds were used to buy back and extinguish $250M of Term Loan A through a Dutch auction, with the rest for general corporate purposes. The indenture limits dividends and other payments, adding to the dividend limits already in the credit agreement. This moves part of the bank debt into secured bonds and pledges the company's assets to the new noteholders.
Walter filed Amendment No. 1 to its S-4 on September 30, 2013 for the same exchange of $500M 9.875% 2020 notes and $450M 8.500% 2021 notes. The excerpt shows the same offer terms as the August filing; the visible changes are that Walter Energy Holdings, LLC is added as a co-registrant and the registration fees are marked as previously paid. The expiration date is still blank and the registration is still not yet effective.
Walter filed a registration statement (Form S-4) on August 22, 2013 to swap its privately placed $500M 9.875% notes due 2020 and $450M 8.500% notes due 2021 for identical notes registered with the SEC, which can be freely traded. This follows through on the registration-rights promise made when the notes were issued in November 2012 and March 2013; the terms stay substantially the same and no new money is raised.
On July 23, 2013 Walter signed a fifth amendment to its credit agreement. It suspends the interest coverage covenant until March 31, 2015 and the senior secured leverage covenant until June 30, 2014, adds a $225M minimum liquidity covenant and capital spending caps of $175M for 2013 and $200M for 2014, and raises interest margins by 1.0%. Consent fees totalled about $17M. Alongside it, the board cut the quarterly dividend to $0.01 per share from $0.125, citing the amendment and current met coal market conditions, payable September 6, 2013. The release names Walt Scheller as CEO and describes the global met coal market as weak, a change from Keith Calder as CEO in the prior context.
Walter closed the $450.0M 8.500% senior notes due April 15, 2021 on March 27, 2013, under an indenture with Union Bank, N.A., guaranteed by its wholly-owned domestic subsidiaries. As announced March 22, $250M of proceeds will repay credit facility debt and the rest goes to general corporate purposes. This adds to the $500M notes issued in November 2012, and carries a lower coupon than those (8.500% vs 9.875%).
On March 22, 2013 Walter got majority-lender consent to a fourth amendment of its credit agreement, adding covenant flexibility if it issues unsecured notes, provided the lesser of 100% and $250M of net proceeds repays term loans. A 1.0% fee applies if a term loan B repricing occurs within six months, and Walter paid a consent fee of about $5.6M. Walter also upsized a planned senior notes offering from $350M to $450M at 8.500%, due 2021, with $250M of proceeds going to repay credit facility debt. This continues the series of credit amendments since 2012.
Walter closed the $500.0M 9.875% senior notes due December 15, 2020 on November 21, 2012, under an indenture with Union Bank, N.A. as trustee, guaranteed by its wholly-owned domestic subsidiaries. This completes the offering priced on November 16; the press release says proceeds will repay credit facility debt, cover fees and fund general corporate purposes. The indenture limits additional debt, dividends, share buybacks, asset sales and liens, and Walter must offer to exchange the notes for registered ones by November 21, 2013.
19 Nov 2012capital raising announcement● NeutralMajor
On November 16, 2012 Walter priced a $500.0M private offering of 9.875% senior notes due 2020, with interest paid June 15 and December 15 starting June 15, 2013, guaranteed by its wholly-owned domestic restricted subsidiaries. It plans to use the net proceeds to repay credit facility debt, pay fees and for general corporate purposes. This is the $500M unsecured notes issue contemplated in the October 2012 credit amendment, and its size meets the amendment's threshold for the covenant and margin changes.
On October 29, 2012 Walter signed a third amendment to its credit agreement that raises interest margins by 1.25-1.50% and changes the leverage and interest coverage covenants. Margins rise a further 0.25% if at least $500M of senior unsecured notes are not issued by April 29, 2013, and Walter gains room to issue up to another $1B of unsecured notes, with at least 50% of proceeds from such offerings used to repay term loans. A 0.25% consent fee is due to consenting lenders. The much higher borrowing costs and repeated covenant changes since August are stated terms; the filing does not give a reason, so any link to business conditions would be inference.
On August 16, 2012 Walter signed a second amendment to its April 2011 credit agreement. It loosens the leverage-ratio test from the quarter ending September 30, 2012, lets Walter count all unrestricted cash against debt (not just $100M), and raises its general investment basket from $150M to $325M. In return, interest margins rise 0.25% once leverage exceeds 3.25:1, and a one-time 0.25% consent fee is due to consenting lenders. Together with the covenant changes, this is a further amendment to the Western Coal financing.
Walter's shareholder rights plan, dated April 24, 2009 with Mellon Investor Services, and the related preferred stock purchase rights expired on their own terms on April 23, 2012. The plan is now of no further effect; the filing gives no other reason or new replacement plan.
On January 20, 2012 Walter and its Canadian borrowers amended the April 2011 credit agreement to raise the amount available to the Canadian borrowers, and the amount borrowable in Canadian dollars, from US$150M to US$275M. No fees were incurred and the total principal that can be borrowed is described as substantially unchanged. This is a small adjustment to the financing set up for the Western Coal purchase.
