Walter Energy Inc. ( WLT ) announced an
increase in the amount of their offerings to $450 million, 8.5%
senior notes due 2021 from the previous $350 million in principal
amount. The notes will be guaranteed by Walter Energy's existing
and future wholly owned domestic business wings.
Walter Energy intends to use the net gains from this offering to
recuperate the $250 million of outstanding debt in its credit
facility and the leftover for general corporate purposes. The
company will pay the interest on Apr 15 and Oct 15 annually. The
first interest will be given out on Oct 15th of this year.
The company often engages in notes offering primarily to pay
down its existing debts. Earlier, in Nov 2012, Walter offered $500
million, 9.875% senior notes due 2020 to finance its outstanding
debt as well as for general corporate purposes.
The company's debt-to-equity ratio at the end of 2012 was
substantially higher at 237.2% from 106.2% at year-end 2011.
Moreover, the current offerings could further exacerbate the
company's debt burden, going forward.
The company's financial position does not present a pretty
picture either with operating cash flow declining 53.3% year over
year to $330.0 million in 2012. Cash balance also witnessed a 9.2%
drop to $116.6 million as of Dec 31, 2012 from $128.4 million at
We apprehend that the continued softness in the U.S. economy
could limit the growth opportunities at Walter Energy. Presently,
the company carries a Zacks Rank #4 (Sell).
We presently prefer Zacks Ranked #2 (Buy) stocks Atmos
Energy Corporation , ( ATO ), Vectren
Corporation ( VVC ), and DTE
Energy Company ( DTE ).
Based in Birmingham, AL, Walter Energy produces and exports
metallurgical coal for the steel industry. It also produces thermal
and industrial coal, anthracite, metallurgical coke, coal bed
methane gas and other related products.ATMOS ENERGY CP (ATO): Free Stock Analysis
ReportDTE ENERGY CO (DTE): Free Stock Analysis ReportVECTREN CORP (VVC): Free Stock Analysis ReportWALTER ENERGY (WLT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment