Major miner in B.C., on verge of bankruptcy, says overdue payments coming
Walter Energy, Inc. says it will come through with $64.2 million in interest payments due May 15 following concerns it was facing bankruptcy.
The mining company that once employed more than 1,000 people in Northeast B.C. had warned of Chapter 11 bankruptcy if the payments were not made or if it wasn't able to restructure its debt, according to a May 5 quarterly filing with the U.S Securities and Exchange commission.
The company had entered a 30-day grace period after missing required interest payments that were due April 15.
Citing weak coal market conditions, Walter Energy, Inc. had earlier said it may consider "voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code" if it can not meet a May 15 deadline for a $64.2 million interest payment due to bondholders.
Walter Energy operates three mines in Northeast B.C. — the Wolverine mine, 15 kilometres outside of Tumbler Ridge, the Willow Creek Mine about 45 kms west of Chetwynd, and the Brule mine, about 45 kms south of Chetwynd.
All three mines — Walter Energy's only Canadian operations — were idled as of June 2014, as the price of steel-making coal plummeted.
The quarterly Form 10-Q filed with the U.S. Securities and Exchange Commission on May 5 also cited depressed metallurgical coal prices and reduced steel production.
The Willow Creek mine was the first to go in April 2013, followed by Brule and Wolverine in April 2014.
The company estimates it saved $8.1 million by idling the operations.
As of March 31, Walter Energy had about $3.1 billion in principal amount of term loans, senior notes, capital lease obligations and equipment financing obligations outstanding.
The company would not offer comment beyond what is stated in the report.
Since being idled, workers at the Brule and Willow Creek mines have been processing coal that was already mined and warehoused.
The company announced layoffs for those who were carrying out that work this spring, bringing the total count of employees down to only 18.
"We had a considerable amount of coal [out of] the ground and as we near the depletion of that stockpile, that is what is driving this decision," Vice President of Corporate Communications Bill Stanhouse told Alaska Highway News in April.
Remaining employees were responsible for overall site and environmental management, as well as security.
"You can't just pull the plug and walk away from a mine," Stanhouse said last month. "In fact, you don't want to do that. It would be far more costly in the event that you had to restart a mine without having provided that maintenance in the idled status. There is [also] environmental work to be done."
Walter Energy has always maintained that it was their goal to reopen the mines, referring to layoffs as a result of idling these operations as "temporary."
Most of the coal mined by Walter is sold under fixed price contracts, mostly with pricing terms of three months and volume terms of up to a year.
"Sales commitments in the metallurgical coal market are typically not long-term in nature, and we are, therefore, subject to fluctuations in market pricing," the company said.