Walter Energy to idle Canadian coal mine; shares rise

Fri Mar 22, 2013 1:27pm EDT
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* Company to idle British Columbia metallurgical coal mine

* North River thermal coal mine in Alabama to close early

* Announces $350 million senior note offering

March 22 (Reuters) - Walter Energy Inc, facing an activist investor that wants to replace half its board, said on Friday it would idle a high-cost metallurgical coal mine in Western Canada within the next few weeks, sending its shares nearly 4 percent higher.

The coal miner, which also has operations in the United States and Britain, said in a regulatory filing that it would also close a thermal coal mine in Alabama nine months earlier than planned, and announced a $350 million debt offering.

Raymond James analyst Jim Rollyson said shutting down the Willow Creek mine in British Columbia is the right move.

"The market's been tough for coal, and that's one mine where they've been hemorrhaging cash, and they just closed up the wound," he said.

Rollyson said the decision may help Walter Energy in its proxy fight with British hedge fund Audley Capital Advisors LLP ahead of its April 25 annual meeting.

Audley announced five board candidates in February, arguing that poor management is behind Walter's weak performance. The fund holds less than 1 percent of Walter shares, according to disclosures from February. Last week, Walter said it was looking at further production cuts and would explore selling non-core assets.   Continued...