CORRECTED-Walter Energy says open to more production cuts, assets sale

Mon Mar 11, 2013 10:16am EDT
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(Corrects quote in paragraph 4)

March 11 (Reuters) - Coal miner Walter Energy Inc, in the midst of a spat with a British hedge fund that is looking to replace half of its board, said it could further cut production at underperforming mines and explore the sale of non-core assets.

The company, which has already curtailed production at low-margin mines by more than 1 million metric tons, did not give details on where the production cuts could be.

Audley Capital Advisors LLP said last month that it planned to nominate five candidates to the board, saying investors had lost confidence in the current board. Audley Capital holds less than one percent of Walter Energy shares.

"Our progress should not be interrupted by the efforts of Julian Treger's UK hedge fund, Audley Capital, which, with less than 1 percent of the Company's shares and no articulated plans for delivering shareholder value, has said it intends to seek 50 percent of the company's board seats," Walter Energy said in a letter to shareholders on Monday.

It also urged shareholders to re-elect their board, saying that a change in leadership could derail the company's progress.

Audley Capital in response urged shareholders not to support the company's nominees, saying that they would be much better served by its slate.

Walter Energy has 10 board members, including nine independent directors and its chief executive. The company's 2013 annual meeting will be held on April 25.

The company, which has operations in western Canada, the United States and the United Kingdom, produced 11.7 million metric tons of metallurgical, or steelmaking, coal in 2012.

Miners such as Walter Energy, Alpha Natural Resources , Consol Energy Inc and Arch Coal Inc have shut production as prices of steelmaking coal plunged about 50 percent in 2012. (Reporting by Swetha Gopinath in Bangalore)