Walter Energy shares drop 10 percent after slashing dividend
(Reuters) - Shares of Walter Energy Inc (WLT.N) fell over 10 percent on Wednesday after the coal miner slashed its dividend to 1 cent a share, from 12.5 cents a share, citing the tough market for metallurgical coal and an amended credit facility.
Walter, which in June pulled a planned credit refinancing, said late on Tuesday that its $2.725 billion credit agreement from April 2011 had been amended for the fifth time, suspending some covenants and adding several others.
The company said this should give it more financial flexibility. The amendment boosts interest rate margins by 1 percent, and makes it easier for Walter to issue more unsecured debt, among other things.
Shares fell 10.5 percent to $12.62 in early trading on the New York Stock Exchange.
Walter has operations in North America and the United Kingdom, and much of its production is metallurgical coal, used to make steel. As the steel market grapples with excess capacity, global metallurgical coal prices have dropped, weighing on miners.
Benchmark coking coal slid to $145 a tonne for the third quarter, its lowest since 2009, from $172 in the second quarter, according to Doyle Trading Consultants, which tracks the market.
Separately, Walter said it expects that when it reports second quarter results, metallurgical coal sales will be about 2.4 million tonnes, and an inventory charge will boost costs slightly.
(Reporting by Allison Martell; Editing by Janet Guttsman and Marguerita Choy)
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