This decision came after it missed an April 15 deadline for a $62.4-million interest payment for its 9.5% senior secured notes due in 2019 and 8.5% senior notes due in 2021, it said earlier this week.
The miner is exercising a 30-day grace period on the interest payment and “is working with its debt holders to establish a capital structure that will position the company to weather a highly competitive and challenging market”.
In the face of depressed met coal prices and reduced global steel demand, “our cash flows from operations were insufficient to fund our capital expenditure needs for 2014 and 2013 and we expect this trend to continue in 2015. If market conditions do not improve, we expect our liquidity to continue to be adversely affected”, it said.
Steel First’s fob Australia premium hard coking coal index stood at $84.72 per tonne on May 6. This compares with $113.39 per tonne at the beginning of this year and $133.70 per tonne at the start of last year.
Nevertheless, Walter Energy said demand for its premium met coal products in core markets had remained steady. It is optimistic about long-term demand and is therefore focused on the long-term market.
“We remain committed to aggressively controlling costs, improving operating performance and productivity, reducing expenses and increasing liquidity,” the company said.
During the first quarter of this year, the miner sold 2.3 million tonnes of met coal, down from 2.6 million tonnes in the corresponding period last year.