April 11, 2013 / 10:55 PM / 5 years ago

UPDATE 1-Walter Energy says results to improve from 4th quarter

* 1st-quarter 2013 sales to rise 9 percent from Q4 2012

* Coal miner squaring off with hedge fund Audley Capital

* Audley nominee cleared of insider trading allegations (Recasts with financial outlook)

April 11 (Reuters) - Coal miner Walter Energy Inc, which is locked in a proxy fight with an activist hedge fund, said on Thursday that its first-quarter performance had improved from that of the fourth quarter of 2012.

Walter said it expects to report metallurgical coal sales of 2.8 million tonnes for the first quarter, up 9 percent from the fourth quarter of 2012, and above the 2.4 million tonnes it reported for the first quarter of 2012.

The company said it also expects a slight improvement in realized metallurgical coal prices from the fourth quarter, when they were 39 percent lower than a year earlier.

It forecast a more than $10 per tonne decrease in the metallurgical coal cash cost of sales from the fourth quarter of 2012.

British hedge fund Audley Capital Advisors LLP is aiming to replace half of Walter’s board at its April 25 annual meeting.

Audley has criticized the company for churning through chief executives and taking on too much debt at punishing interest rates. Walter has called the fund’s campaign a “hit and run” designed to turn a quick profit.

Audley controls less than one percent of Walter, which produces metallurgical coal used by steelmakers, as well as some thermal coal, in Canada, the United States and the UK.

Walter’s shares rose 5.7 percent to $25.50 in aftermarket trading.


Separately, regulators in Canada dismissed all insider trading and tipping allegations against Robert Stan, one of Audley’s board nominees.

Walter had highlighted the accusations, which dated from 2011, in a March letter to shareholders that criticized Audley for nominating Stan.

The Alberta Securities Commission dismissed the allegations in a decision issued on Wednesday.

In an emailed statement, Walter said Audley’s managing partner, Julian Treger, had not properly disclosed the allegations, which were posted on the commission’s website but not mentioned in Audley’s proxy filing.

“If Julian Treger knew about a serious government inquiry into one of his nominees and decided not to disclose it to shareholders as material information while asking for their vote, his slate doesn’t deserve shareholders’ trust,” it said.

“If Mr. Treger didn’t know about the inquiry, that fact is equally damning.” (Reporting by Allison Martell; Editing by Janet Guttsman, Phil Berlowitz and Steve Orlofsky)

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