UPDATE 2-Hedge fund to launch proxy fight against Walter Energy
* Audley Capital Advisors cites "poor management"
* Weak demand from steelmakers has hurt coal miners (Adds quotes from analyst, background, detail on the fund's holdings and arguments.)
By Allison Martell
Feb 19 (Reuters) - A British hedge fund announced plans on Tuesday to nominate five candidates to the board of Walter Energy Inc, saying investors have lost confidence in the metallurgical coal miner's current board, sending its shares higher.
Walter Energy said it had received the notice of intent from an affiliate of hedge fund Audley Capital Advisors LLP. The company said in a statement it had no contact with Audley aside from the notice of intent.
"Following the acquisition of Western Coal Corp in November 2010, Walter Energy has consistently failed to deliver shareholder value as a result of questionable financial decisions and poor management," said Audley's statement.
Walter Energy, which has operations in western Canada, the United States and the United Kingdom, took a $1.1 billion goodwill impairment charge in the third quarter, largely related to the Western Coal deal. It is set to report fourth-quarter earnings on Wednesday after the close.
In recent quarters, weak demand from steelmakers has hit metallurgical or "coking" coal miners' sales volumes and prices.
"Most of these coal writedowns are market conditions, and almost all the mining acquisitions happen near the top, when you look back. Everyone's faced similar writedowns," said Iberia Capital Partners analyst David Beard. Continued...