Walter Energy, Inc.

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.

asset acquisition disposition

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.

debt financing

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.

material agreement

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).

material agreement

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.

listing compliance notice

Walter Energy, Inc.'s exchange filed to remove a class of its securities from listing.

listing compliance notice

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.

bankruptcy or receivership

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.

listing compliance 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.

listing compliance notice

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).

security holder rights change

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.

material agreement

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.

security holder rights change

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.

material agreement

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.

security holder rights change

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.

material agreement

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%).

debt financing

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.

material agreement

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.

debt financing

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.

capital raising announcement

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.

material agreement

Walter Energy, Inc.'s exchange filed to remove a class of its securities from listing.

listing compliance notice

On April 1, 2011 Walter completed its purchase of all of Western Coal under the December 2010 Arrangement Agreement, after Western Coal shareholders approved it on March 8 and the BC court issued its final order on March 10. Walter issued 8,951,558 shares plus CAD$2,107,018,737 in cash; after the deal 62,225,827 Walter shares are outstanding, about 14.4% held by former Western Coal holders. It signed a new credit agreement with Morgan Stanley Senior Funding as agent ($950M five-year tranche A, $1,400M seven-year tranche B, $375M five-year revolver) and repaid and terminated the 2005 credit agreement with no penalties. Joe Leonard stepped down as interim CEO (staying on the board) and Keith Calder became CEO, with Calder, David Beatty and Graham Mascall joining the board; Walter shares were also conditionally approved for listing on the TSX. This resolves the Western Coal acquisition, financing and interim-CEO threads.

asset acquisition disposition

On March 10, 2011 Walter said it had finished negotiating a lease of about 75 million tons of recoverable Blue Creek coking coal reserves in Tuscaloosa County, Alabama from a Chevron subsidiary, and had signed an agreement to buy the North River steam coal mine in Alabama from another Chevron subsidiary. The mine price is minimal cash at closing plus assumed liabilities the company does not expect to be material, and the company said it expects the deal to be neutral to slightly accretive to earnings in the first year. Both are expected to close April 30, 2011, subject to third-party consents, regulatory notice periods and no injunctions. This adds to the Alabama expansion plans mentioned earlier, separate from the pending Western Coal deal.

asset acquisition disposition

On Dec 2, 2010 Walter signed an Arrangement Agreement to buy all of Western Coal, following up the Nov 2010 proposal. Each Western Coal share gets CAD$11.50 in cash, 0.114 Walter shares, or a mix, with pro-ration if cash exceeds 70% or shares exceed 30%. Walter may issue up to about nine million shares (roughly 14% of those now outstanding), with closing expected in Q2 2011 and either side able to terminate if not done by June 30, 2011. Lenders (Morgan Stanley Funding, Bank of Nova Scotia, Credit Agricole) committed $2,725M of senior secured facilities to fund the cash, pay fees and refinance existing debt of both companies, which would replace the 2005 credit agreement. Western Coal would owe CAD$99M if terminated in specified circumstances, such as a change in its board's recommendation.

business combination

On Nov 17, 2010 Walter agreed to buy 19.8% of Western Coal Corp. (54,547,858 shares) from Audley entities at CAD$11.50 per share, about CAD$630M (US$615M), in two installments. It also proposed to buy all of Western Coal at CAD$11.50 per share in cash and Walter stock, and agreed to 14 days of exclusive talks. This is a new acquisition thread, and a large departure from the pure-Walter coal operations of earlier filings.

material agreement

On Sept 3, 2009 Walter signed a sixth amendment to its 2005 credit agreement, extending the revolver's maturity from Oct 2010 to July 2, 2012 and setting its size at $300.0M (it was due to shrink to $250.0M by Dec 31, 2009). Pricing rose 100 basis points, capital expenditure and senior secured leverage covenants were removed, and the consolidated leverage limit was loosened from 2.5x to 3.0x. The $138.2M term loan due Oct 2012 is unchanged.

material agreement

the New York Stock Exchange certified Walter Energy, Inc.'s securities for listing, clearing them to begin trading.

listing compliance notice

Walter completed the spin-off of its Financing business (Walter Investment Management LLC) on April 17, 2009, distributing about 52.8 million Spinco interests, one per Walter share held on the Feb 27, 2009 record date. Spinco then paid a taxable dividend and merged into Hanover Capital Mortgage Holdings, which was renamed Walter Investment Management Corp. This completes the spin-off and merger thread. Walter signed a trademark license, transition services, tax separation and joint litigation agreement with Spinco; Walter keeps liabilities unrelated to Spinco, such as homebuilding.

asset acquisition disposition

Walter and HCM amended the merger agreement so Walter can no longer waive the closing conditions on IRS rulings and an accountants' opinion about the tax-free treatment of the spin-off and merger. The SEC declared HCM's registration statement effective on Feb 18, 2009. HCM's shareholders will vote on April 15, 2009, and Walter's record date for the spin-off dividend is Feb 27, 2009. The press release says the merger is expected to close in the second quarter of 2009, pending HCM shareholder approval and other conditions, and no Walter shareholder vote is needed.

business combination

the New York Stock Exchange certified Walter Energy, Inc.'s securities for listing, clearing them to begin trading.

listing compliance notice

Walter signed a merger agreement with Hanover Capital Mortgage Holdings (HCM) to separate its financing business, the non-core unit it planned to split off. The financing business, held in a new subsidiary (Spinco), would be distributed to Walter's stockholders and merged into HCM, which would be renamed Walter Investment Management Corporation. Walter holders would own about 98.5% and HCM holders about 1.5% of the combined company. Mark J. O'Brien would become Chairman and CEO. No Walter stockholder vote is required, and closing depends on conditions including HCM stockholder approval, IRS rulings and REIT qualification.

material agreement

Walter agreed with underwriters (Morgan Stanley, Banc of America Securities, SunTrust Robinson Humphrey) to sell 2,800,000 new common shares at $90.75 each, for about $243.8 million of net proceeds (about $280.4 million if the underwriters' option for 420,000 more shares is fully used). It plans to repay about $68.8 million of the term loan and about $175.0 million of revolver borrowings under the 2005 Credit Agreement, with revolver commitments cut from $475.0 million to about $387.5 million. Existing holders are diluted by the new shares, while debt falls.

material agreement

On April 30, 2008, Walter repaid and terminated both Mid-State mortgage warehouse facilities (Trust IX and Trust XIV, $350.0 million combined) with no early termination penalties, ending the renewals seen in 2007. A Fifth Amendment to the credit agreement raised the revolver by $250.0 million to $475.0 million (with required reductions starting in 2009), raised pricing on the revolver and term loans by about 1.5 percent, dropped the requirement to keep $350.0 million of warehouse facilities, pre-approved the planned separation of the Financing and Homebuilding businesses, and loosened financial covenants for a time while tightening others. A same-day press release reported Q1 2008 income from continuing operations of $0.5 million ($0.01 per diluted share) versus $32.1 million a year earlier, including $28.0 million of pre-tax charges at Financing and Homebuilding, and said some metallurgical coal for 2008-2009 was settled above $315 per metric ton.

material agreement termination

Walter completed the spin-off of Mueller Water Products on December 14, 2006, giving shareholders 1.6524432 Mueller Series B shares per Walter share held on the December 6 record date (about 85.8 million shares in total, all that Walter owned). This resolves the spin-off thread; it was structured to be tax-free apart from cash for fractional shares, and Mueller's results will now be shown as discontinued operations. Chairman, President and CEO Gregory Hyland resigned from Walter at the close of business December 14 and continues in those roles at Mueller, which took over his employment and change-in-control agreements, though Walter keeps the obligation to pay his 2006 incentive payment. A Joint Litigation Agreement with Mueller allocates responsibility for pending and future litigation and shares insurance.

asset acquisition disposition

Walter agreed to convert a combined $99,120,000 of its 3.75% convertible notes into 5,553,723 common shares, paying a $13,031,200 inducement premium plus $638,355.41 in accrued interest and other consideration. It also announced the board rescinded the previously announced two-for-one stock split after resolving civil lawsuits with two noteholders, CC Arbitrage and CNH CA Master Account, so the split dividend declared on November 9 will not happen. The spin-off dividend of Mueller shares is not mentioned as rescinded.

capital raising announcement

Walter declared two dividends: a one-for-one stock split dividend (one extra share per share held) and a spin-off dividend distributing its Mueller Water Series B shares, expected at between 1.65 and 1.94 Mueller shares per Walter share, both with a December 6, 2006 record date. Noteholders can convert before December 14, 2006 to take part, and the company said it will pay those conversions in shares. This sets up the Mueller separation and explains the conversion deals that follow.

dividend declaration

Walter Industries signed three agreements with Mueller Water Products, which was a wholly-owned subsidiary before its IPO and will be majority-owned afterward: a corporate agreement (an option to buy more Mueller shares plus registration rights), a tax allocation agreement, and a transition services agreement under which Walter provides tax, accounting, HR and other services at cost. All are effective May 26, 2006, and set the terms between parent and the newly listed subsidiary.

material agreement