Alpha Natural Resources to Issue $400M Notes - Analyst Blog


Shutterstock photo

Coal producer Alpha Natural Resources ( ANR ) announced that it will issue $400 million aggregate principal amount of senior secured second lien notes due 2020 in a private offering subject to market conditions.

The company intends to utilize a portion of the net proceeds to fund purchases or repayments of outstanding debts with near-term maturities.  The remaining proceeds, if any, are intended for general corporate purposes.

The long-term debt-to-capital ratio at the end of the first quarter was 45.4%. Long-term debt, including the current portion of long-term debt as of Mar 31, 2014 was nearly $3.4 billion while interest expenses at the end of the first quarter were $64.9 million, up 9.4% year over year.

Second lien notes are expected to sport a higher rate of interest compared to first lien notes. The higher interest rates give investors a cushion against the high risk involved in these notes.

In Dec 2013, the company had issued $250 million Convertible Senior Notes. The net proceeds from the issue were utilized for similar purposes as this current issue.

Alpha Natural Resources' first quarter 2014 earnings of 7 cents per share surpassed the Zacks Consensus Estimate of a loss of 58 cents by a wide margin.

As per a recent World Steel Association report, global steel usage is expected to increase 3.1% year over year in 2014. However, the supply glut in global coal markets is putting downward pressure on prices. To take into account the demand-supply imbalance, Alpha Natural Resources made downward adjustments to its met coal shipment guidance.

Alpha Natural Resources currently carries a Zacks #3 Rank (Hold). Other better-ranked players in the coal industry include Alliance Holdings GP, L.P. ( AHGP ), China Shenhua Energy Co. Ltd. ( CSUAY ) and Alliance Resource Partners LP ( ARLP ). While Alliance Holdings GP and China Shenhua Energy Co carry a Zacks Rank #1 (Strong Buy), Alliance Resource Partners holds a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ALLIANCE HLDGS (AHGP): Free Stock Analysis Report

ALPHA NATRL RES (ANR): Free Stock Analysis Report

ALLIANCE RES (ARLP): Free Stock Analysis Report


To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: AHGP , ANR , ARLP , CSUAY

More from


Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by