Walter Energy’s Canadian. U.K. mines placed under creditor protection

Walter Energy (OTC Pink: WLTG), which was recently approved by its bankruptcy court for a sale process on its U.S. coal assets, announced Dec. 7 that its wholly-owned subsidiary Walter Energy Canada Holdings has obtained creditor protection under the Companies’ Creditors Arrangement Act (Canada) (CCAA) under an initial order granted on Dec. 7 by the Supreme Court of British Columbia.

The CCAA filing is intended to facilitate ongoing operations while Walter Canada pursues a marketing process for its Canadian assets and for its holdings in the United Kingdom, including assets owned by United Kingdom subsidiaries of Walter Canada. Walter Canada, Walter United Kingdom and their assets were not part of the U.S. chapter 11 filing and are not included in the asset purchase agreement that the company entered into on Nov. 5. 

Under the terms of the initial order, KPMG will serve as the court-appointed monitor of Walter Canada. 

Under the CCAA proceedings, it is expected that Walter Canada’s operations will continue uninterrupted in the ordinary course of business. Walter Canada’s Canadian and UK-based mines are currently idled as a result of market conditions. Obligations incurred after the filing date, including obligations to employees and key suppliers of goods and services, will be paid on an ongoing basis.

On July 15, Walter Energy and its U.S. subsidiaries filed for relief under chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the Northern District of Alabama. On Nov. 5, Walter Energy entered into an asset purchase agreement with a newly formed entity capitalized and owned by members of the company’s senior lender group, pursuant to which the new company will acquire substantially all of Walter Energy’s Alabama assets.

Walter Canada’s operations consist of three surface mines: the Wolverine Mine, the Brule Mine and the Willow Creek Mine.

  • The Wolverine Mine, located approximately 15 miles south of Tumbler Ridge, British Columbia, is an open-pit metallurgical coal mine with a coal processing plant and a rail load-out facility capable of handling 2.0-2.5 million metric tons per year. The mine produces premium metallurgical coal.
  • The Brule Mine is an open pit metallurgical coal mine and produces a premium low volatile pulverized coal injection (PCI) product. Coal from Brule is transported by truck to the Willow Creek Mine for processing and shipping.
  • The Willow Creek Mine is an open-pit metallurgical coal mine with a coal processing plant and a rail load-out facility. The Willow Creek Mine produces both metallurgical and coal used for pulverized injection purposes. The coal reserves are comprised of an estimated one-third metallurgical coal and two-thirds low-volatile pulverized coal (PCI).

Walter Energy’s UK operation consists of the Aberpergwm Mine, an underground development mine located near the town of Neath in South Wales. The mine produces anthracite coal, which can be sold as a low-volatile PCI coal, and other products used for domestic purposes.

The U.S. bankruptcy court for Walter Energy on Nov. 25 approved a stalking horse auction process for the company’s U.S. assets, with the stalking horse bidder being the group of Walter Energy creditors. The Walter Energy companies currently in Chapter 11 protection include: Atlantic Development and Capital LLCAtlantic Leaseco LLC;Blue Creek Coal SalesBlue Creek Energy; J.W. Walter Inc.; Jefferson Warrior RailroadJim Walter Resources; and Maple Coal Co. LLC.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.