Boston, MA 09/25/2014 (wallstreetpr) – Investors at Walter Energy, Inc. (NYSE:WLT) have on their hands a point of concern as the company continues to struggle with financial difficulties attributed to a decline in demand for coal. There has already been suggestions that the company could plummet into bankruptcy as early as next year, should it’s cash balance continue to decline at the current rate.
Declining Bonds Value
This month alone, Walter Energy, Inc. (NYSE:WLT) has seen its bonds lose up to $363 million in value raising more concerns as the loss is bigger compared to that of rivals. Wall Street remains bearish of the space as regulators continue to clamp on Coal, which is seen as a core pollutant of the environment. Coal prices are at an all-time low considerably affecting margins of companies in the space. Walter Energy, Inc. (NYSE:WLT) is considered the worst performer of all the coal producers having seen the value of its $2 billion bonds sink in value by a high of 17.7%.
Cost Cutting Measures Initiated
The demand for coal has mostly dropped because of uncertainty of the Chinese economy resulting in a reduction in shipments to one of the world’s largest industrial epicenter. Coal oversupply in the industry has also pushed prices to an all-time low. There are concerns that the company could run out of cash sooner than later as most of the remaining $294 million is expected to be used to pay for rising interest expenses.
According to data compiled by Bloomberg, Walter Energy, Inc. (NYSE:WLT) is believed to have burnt up to $159.1 million over the past 12 months heading to June 30. The company’s CEO, Walter Scheller III has resorted to idling some mines as one of the ways of increasing operational efficiencies as well as cutting costs and offloading some assets. Coal prices fell to a low of $120 a metric ton in April of which analysts believe should rise to $150 a metric ton for Walt Energy to be in a position to break even.
