Metallurgical coal producer
Walter Energy Inc.
) announced that it sold $320 million 9.5% senior secure notes due
2019 in a private offering. The company will utilize the net
proceeds from the issue to repay $298.1 million of outstanding debt
under its Revolving Credit Facility and to pay related fees and
The $320 million notes issued by Walter Energy followed the $450.0
million 9.5% senior secured notes due 2019 issued on Sep 27, 2013
and the $200.0 million 9.5% senior secured notes due 2019 issued on
Mar 27, 2014.
The proceeds from the previous offerings were used to swap existing
debts and for general corporate purposes.
The interest payment of the new series of notes will be due on Apr
15 and Oct 15 of each year. The senior notes issued in 2014
will increase the company's annual interest burden by $49.4
million. The current financial position of the company will
allow it to meet the interest expenses.
Metallurgical Coal Market
Walter Energy is a metallurgical coal producer, so any improvement
in met coal demand will also benefit the company. The World Steel
Association forecasts a 3.1% increase in global steel usage in
2014. Any improvement in the steel market is expected to create
fresh demand for met coal and improve the prospects of producers
like Walter Energy and
Alpha Natural Resources
Walter Energy currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the coal industry include
Alliance Resource Partners LP
CONSOL Energy Inc.
). Alliance Resource Partners carries a Zacks Rank #1 (Strong Buy)
while CONSOL Energy holds a Zacks Rank #2 (Buy).
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