Walter Energy fighting to stay afloat financially

Company must make major deadline by Friday

Walter Energy Inc., which owns this and several other mines near Brookwood, faces an uncertain future as it struggles to meet critical financial deadlines this week.
File | The Tuscaloosa News

By Patrick Rupinski
Business Editor

Published: Sunday, May 10, 2015 at 3:00 p.m.

Last Modified: Sunday, May 10, 2015 at 3:27 p.m.

This week could be pivotal to the future of one of West Alabama's largest employers, Walter Energy Inc., as it moves to meet a Friday deadline to make a major debt payment. But even if the payment is made — as the company said it would do last week — Walter Energy's still faces an uphill battle.

The Hoover-based company owns Jim Walter Resources, which operates underground coals mines near Brookwood and employs more than 1,000 people in Tuscaloosa County. Walter Energy also has and other coal mines, coal-related facilities and methane gas operations in the state with most of that concentrated in central West Alabama and Jefferson County. Most of its operations and employees are in Alabama but the company also has coal mines in West Virginia Canada and the United Kingdom.

So why is this week crucial to the company?

On April 15, Walter Energy missed interest payments on on its 9.5 percent senior secured notes due 2019 and its 8.5 percent senior notes due 2021. Under the terms of the notes, the company has a 30-day grace period, which it invoked. During that time, it could renegotiate a payment plan with the creditors or come up with other means to make the payment.

The 30-day grace period ends this Friday.

On Thursday, Walter Energy issued a statement saying "that on May 15, it will be making interest payments under its indenture agreements with the holders" of the two affected senior notes.

It said it invoked the 30-day grace period "as it worked with its debt holders to explore alternatives to recapitalize its balance sheet in light of what has been a challenging met (metallurgical) coal pricing environment. The company will continue to engage in such discussions said.

The statement also said Walter Energy "does not have a current liquidity issue, as it had approximately $435 million of cash and investments as of March 31, 2015."

A Walter Energy spokesman said Friday that the company had no comment beyond the released statement.

Walter Energy is a major producer of metallurgical coal, which is used in steel making. The global demand for such coal now is down as is the price paid such coal, which has hurt the company's bottom line.

Wall Street speculation on whether Walter Energy would make the required interest payment by the end of this week increased after Walter Energy released its first quarter results on Tuesday.

The quarterly financial report noted continuing losses. The filing with the U.S. Securities and Exchange Commission also said that recent events "raise substantial doubt about our ability to continue as a going concern."

In the 43-page quarterly filing, the company said:

"On May 15, 2015, if the interest payment default is not cured, the default would be considered an event of default and all outstanding notes will become due and payable immediately without further action or notice. An event of default would also trigger cross defaults in the company's other debt obligations."

That could result in the debt holders demanding immediate payment and result in a bankruptcy reorganization filing, it said.

At the end of its first quarter on March 31, Walter Energy said it "had approximately $3.1 billion in principal amount of term loans, senior notes, capital lease obligations and equipment financing obligations outstanding." 

Stock market analysts who follow publicly traded company, have warned for months that Walter Energy could file for bankruptcy reorganization this year.

Walter Energy acknowledged that possibility in its first quarter filing.

"Over the course of the last three years, our results of operations, including our operating revenues and operating cash flows, have been negatively impacted by weak coal market conditions, depressed metallurgical coal prices, reduced steel production and global steel demand. Our cash flows from operations were insufficient to fund our capital expenditure needs for 2014 and 2013, and we expect this trend to continue in 2015. If market conditions do not improve, we expect our liquidity to continue to be adversely affected," it said.

For the short-term, the global demand for coal — particularly the metallurgical coal used in steelmaking and primary coal coming from the company's West Alabama mines — is expected to remain depressed during 2015, with a modest recovery expected in early 2016, Walter Energy said, citing a global report on coal demand.

It said "demand for our premium metallurgical coal products in core markets has remained steady, and we believe that the long-term demand for our metallurgical coal within all of our markets to be strong as industry projections indicate that global steel making will continue to require increasing amounts of high quality metallurgical coal. 

"As such, we are focused on the long-term metallurgical coal market. We remain committed to aggressively controlling costs, improving operating performance and productivity, reducing expenses and increasing liquidity. Although we have responded to the deterioration in market conditions by curtailing, and in some cases idling, higher-cost and lower-quality coal mines, which include our Canadian operations, we have the capability to increase our metallurgical coal production when the market rebounds to take advantage of potential opportunities in this highly volatile market."

Walter Energy's stock closed Friday at 46 cents per share. Its 52-week high was $7.08 per share and its 52-week low of 30 cents occurred last week.

Rainy Day Post

What better thing to do on a rainy day but post pictures of pretty days bearing the fruits of rainy days?

Wild Azalea
(click photos to enlarge)

Azaleas up front, Mountain Laurel behind with Star Anise mixed in

I have been living here for more than 30 years now and honestly believe I have never seen the creek so full of blooms. This is the year for all nature photographers in the area to get out and explore the scenery. Wild Azaleas are in full bloom now with Mountain Laurel quickly opening around it.

Hurricane Creek is one of the special places where all of these can be found growing together.
Wild Azalea...

Pink Alabama Azalea

The Azaleas come in several colors along the creek. They range from hot pink to light pink and white.
My favorite is the Azalea alabamense. (seen below)

azalea alabamense

It has a single yellow tongue on all white leaves. The smell is a delicious lemony fragrance that can be detected throughout the watershed for about 3 weeks.

azalea alabamense

                                                                                                                                                          
Dogwoods are beginning to fade a bit but there are some really pretty ones left if you look for them.

The ground cover is almost too much to photograph with everything from Dwarf Iris to Spider Wort.

Spider Wort

Coreopsis- auriculata. Eared tickseeds

Dwarf Iris

Wild Geranium

I posted this photo of my Huckleberry bush earlier.

 Same bush after a little sun and rain

 Even the Mulberry trees are more abundantly full than I have ever seen them. Looks like it will be a great season for wine and jelly makers!

Take time this season folks to go out in the woods and appreciate the wonderful gifts of Spring!

Don't forget to look up. Many treasures are hidden in the tree tops like this Cross Vine 

(seen above) and the almost unseen Tulip Poplar Trees.

In New Zealand the unfurling fern is called a Koru. It is a symbol of sign of overall renewal.  It symbolizes new life, growth, strength and peace. Hurricane Creek is just that. It is a creek in recovery full of new life every year and one of the most peaceful places on Earth. Everyone should take the time to get out there!

LETTER: Hurricane Creek cleanup successful

Jim Shaddox
President of Friends of Hurricane Creek
Tuscaloosa

Published: Tuesday, March 31, 2015 at 7:00 p.m.

Last Modified: Tuesday, March 31, 2015 at 7:50 p.m.

Dear Editor: On a gorgeous Saturday, March 6, Friends of Hurricane Creek hosted their 22nd Creek Cleanup with the help of many volunteers who care about keeping our beautiful creek clean.

A sense of community and caring is something we members of FOHC feel especially good about during and after days like this. It buoys our sense of optimism that others will carry on our work when we no longer can. I want to thank all those who got up early from in town and out to get a little dirty and sweaty for a good cause. A couple dozen or more had the fun of picking up litter from a canoe at a perfect water level for paddling.

Lunch was outstanding as usual, very tasty with good variety, topped off by Nancy Callahan’s coveted banana pudding.

Our board is also to be commended for organizing, donating and working the event that came off so well. Last, but certainly not least, a special thanks to our donors large and small who help fund our ongoing work of which this is a part.

Restoration of Hurricane Creek has been a long, hard struggle. This past Saturday was a celebration of the renewal of our creek as full of life, forever flowing. We look forward to next year’s cleanup and festival, but keep in touch via our web site
www.hurricanecreek.org for upcoming events and news till then.

Hurricane Creek Aerial Recon 2015

The flight started out as many have in the past. 

Beautiful weather and little turbulence.

Lake Tuscaloosa spillway

Turning East out of the airport we flew over town. I couldn't resist getting a few shots of the city, starting with the Stillman College campus.

A little farther up river we got a clear view of the Crimson Tide, Denny Stadium.

The slight overcast sky was perfect for getting good color. I had a feeling this would be a great day for aerial photography.

TUSCALOOSA RAIL YARD

 Flying over the 15th street and 359 intersection, it wasn't hard to see the nearly 60 oil cars standing in line at the rail yard. Later we encountered at least that many more inbound across the old trestle over the Black Warrior River. This bridge has been the source of a lot of controversy since the recent rash of bomb train explosions. 

All of these cars are of the old DOT-111 variety. I ground truthed the photo later and found them all to be old variety.
NUCOR
Following the Black Warrior River we came up on NUCOR Steel. I saw some issues there that will need further investigation by your Black Warrior Riverkeeper. I will report more on that later.

NUCOR Steel

NUCOR slag dump

Crossing NUCOR, we come to the Eastern Bypass / Eastern Boondoggle. 

This pork barrel project has been on the books for what seems like a lifetime. It was very poorly planned with very little in the way of any scientific research as required for such huge and expensive undertaking. The EIS was badly flawed and full of half true information. Friends of Hurricane Creek and West Alabama Sierra Club stood together many years ago and challenged the validity of the surveys. So far our demands for information and responsible planning have fallen on deaf ears. ALDOT and a handfull of developers have convinced some of our elected officials that it will ease traffic. I disagree. It is throttled on the North side to where none of the needed truck traffic will be routed around town as some politicians would have you believe. 

The Eastern Boondoggle comes from nowhere and leads to the interstate as a development corridor only. Major developers hold the land at every exit and have plans to line their pockets at the expense of citizens who can't even vote for or against the issue or the politicians who are pushing it.

In 2010 there was an editorial in T'News about apartments planned for the bypass corridor on the north side of the river. Despite the many objections, Northport city planners and council approved the project with the knowledge that Alabama taxpayers wold have to pay millions more for the property after construction. I can't imagine Morrow company giving it up without profit.

Then again this year, the Tuscaloosa City planners and council approved a multi million dollar development right in the middle of the same corridor. On the north side of the river again. 640 homes in the higher price range were approved in the corridor. No one can make me believe that ALDOT can and or will ever have the money to buy out houses in that range. "Estimated at $20 million before the construction. The homes will be built in phases and range in value from $300,000 to $1 million, and the development also features 48 acres of open space, walking trails connecting to the Townes of North River and an area for future commercial development." (Tusc News)

It should be noted here that from this point of termination on Jack Warner Pkway to the interstate the entire corridor is in the Tuscaloosa Police Jurisdiction (PJ) None of the people effected by the bypass are in the city limits but only in the PJ. None of us can vote for or against this nightmare. We have the right to pay taxes and expect nothing in return but disrespect.


Mt. Trashkaloosa

Advanced Disposal Landfill is the red scab in the middle

From the Eastern bypass you can look in the direction of Cottondale and the largest bright red scar on the horizon is Mt. Trashkaloosa, AKA Advanced Disposal Landfill "Eagle Bluff" Located right in the middle of a residential area it has become quite a nuisance from health, safety and aesthetics. From the ground it is enormous. Towering well above the treeline it covers the area with dust and wind-blown litter and when raining it fills the streets with a thick coat of slimy mud containing a cocktail of whatever the trucks drive through in the waste stream. 

After years of citizen complaints ADEM (Alabama Dep. of Environmental Management) has done very little to hold them accountable. Today I noted litter outside the containment area. Heavily eroded slopes with little or no vegetative cover. Deep erosion gullies on slopes that have been bare for months.

 Mt. Trashkaloosa is now the highest man-made structure around and is made of trash! Holt Alabama is still in recovery from the massive tornado that hit on April 27, 2011. We are trying to improve our community and bring it back to a vibrant area again. Thing is, who wants to invest in nice homes with this ever growing red scab in our faces?

Last Tuscaloosa county traffic count showed 1,600 trucks a week, or 320 a day

People living and dieing along 12th street are constantly insulted and assaulted by the heavy trucks rolling in and out of the landfill. Coming out their tires are covered in mud that consists of dirt, Sheetrock, paint, solvents and adhesives, asphalt, concrete dust, and every imaginable product found in home and building construction debris. Once that mud dries it becomes airborne dust which is in my opinion very unhealthy for the community.

 

 I mentioned people dieing. The Chambers Cemetery is right outside of the landfill gate. It stays covered in mud and dust from hundreds of trucks passing within a few feet of the graves daily. They were there long before the landfill and should deserve some degree of respect. Funerals are regularly disrupted and blocked by the trucks. What can we expect from a bunch of out of state garbage collectors? 

They recently got an increase in traffic to double the old 320 a day. Now they can expect as many as 640 per day.

26 cars in the funeral procession and about 5 trash trucks were in total gridlock for about 15 minutes.

Check out the video about the funerals.  

I did not invade the families privacy. I was invited there by friends and family members to document the interference dust and noise during their grieving process.

The Holt Lock and dam was flowing pretty strong with 10 gates open a couple of feet at least.

The mouth of Hurricane Creek lies just below the dam and was a bit more turbid than I would like to see. It was pretty though with all of the Red-buds and Crab-apples in bloom.

Just inside the mouth is the old GM&O RR bridge once used to shuttle people and coal to and from Kellerman to Tuscaloosa.
The bridge isn't used any more but due to a "superfund" site at one end and US Army Corps of Engineers on the other it can't be accessed any more. It's a shame because it really is a beautifully built structure.

The wide open green field on the creek bank is the future site of the new Friends of Hurricane Creek campground thanks to our great friend, Doug Woodward. Doug has offered us this site as a take out for canoes and camping area. Many thanks to Dr. Woodward for being there for us.

Holt sewer project
We looked over the new sewer line project in Holt. To my pleasure, there weren't any obvious problems to be seen.

PARA Hurricane Creek Park,
Flying over Hwy 216 I found another pleasant surprise. The new parking area for the PARA Hurricane Creek Park is almost ready for paving. I have been watching this site since they broke ground. It is the first time since ALDOT tore that place up and left in abandoned that the runoff is actually cleaner than the creek itself. Great job of doing it right on the front end and still making money on the back side. Good Job!

I spoke with Gary Minor PARA Director and was told we should have it open by mid May or at the latest end of May. Scores of parking places with 3 trailer parking spaces for canoe trailers. I can't wait!

Black Warrior Minerals strip mine

Back to the ugly stuff we flew over Black Warrior Minerals strip mine. They have been bad neighbors for many years and caused untold damage from breaking dams to consistent discharge of known pollutants.

They are now at the end of this cut and then hopefully will reclaim. It will take generations to heal and will never be as good as it was before. I have never been around a strip mine operator who didn't have the same old tired jargon of "We'll leave it better than we found it" 

Below you see the working face on the right and what passes for reclamation in Alabama on the left.

It might be humorous if it wasn't so pitiful.

 

Jim Walter slurry pit
Just North of the BWM strip mine is the Jim Walter slurry pit. The pit is about 1.25 miles long and was several hundred feet deep when they started filling it with toxic coal slurry from underground longwall mining. The coal is cleaned using a flotation method of mixing diesel fuel with several other surfactants and emollients that make the coal float and all of the impurities along with the toxic brew of the slurry compound is pumped to the surface and dumped into unlined abandoned strip pits. None of the ground water around here is safe to drink. 

 I noticed a dredge in the pit excavating slurry for coal pellatizing. A process where slurry is re-mined using a dredge and useable coal processed into a burnable fuel. It is relieving pressure on the over burdened dam so I will take a wait and see approach to what the discharge is like before I render an opinion.



TRI
Right next door to the slurry pit is Tuscaloosa Resources Inc. This is another sore spot for Hurricane Creek. We have fought them in every court Alabama has to offer and recently won a judgement against them and ADEM for issuing the permit into an impaired stream.ADEM administrative judges have been the only ones who ever ruled against us. (surprised?)

The mine is supposed to be in reclamation but below is their final discharge point. Again this is all that Alabama demands of it's coal industry. It's shameful what is called accountability here.

 

Mercedes Benz 

Leaving the mines we flew over to the Mercedes Plant on I-59. It's always a pleasure to look around their site. Since the day Mercedes came into the watershed they have been the best environmental neighbors we have hands down.

The retention pond out front is one of the best kept beaver ponds around. Instead of killing them Mercedes works with them to clean the water before it leaves the site!

ALDOT on I-59

It was getting time to head back so we flew along the widening project on I-59. ALDOT had promised us that they would implement some very new and innovative best management practices during this process. As we flew along I was greatly impressed with the work. Large retention ponds were installed properly and plenty of redundant best management practices could be seen.

In the median they have excavated in phases and back filled each excavation with gravel before installing the drain pipes. I have never seen a better run road project by ALODT. That doesn't mean I believe they can build the Eastern (boondogle expressway) bypass with the same control. we'll see.

One more time over Denny Stadium for this really cool shot into the bleachers. I thought we were heading in.

 

Bomb Train over Northport

As we approached the airport I happened to catch sight of a Crude oil train (Bomb trains) on the old bridge over the river. It was parked with the full weight on the old creosote pole span. It could be seen snaking it's way from right over the Tuscaloosa Amphitheater all the way across the river and through the middle of downtown Northport. 

After this it really was time to call it a day for the flight. We headed back to the airport for a text book perfect landing and a great feeling of accomplishment. I love these flights.

Leaving the airport I decided to check on the parked train. It's called ground truthing. Sure enough it was still there and was, in fact a bomb train with 1267 crude oil placards. Sitting perched about people's houses, businesses, traffic and most of the town of Northport was a unit train or as I call them, bomb train. 

The potential for disaster is lost on most people. I have seen too much of the aftermath from wrecks with bomb trains that I would be terrified to live anywhere close to where they pass. It is much closer than you think. A disaster can occur on good tracks and bridges. This one is far from that. I went around and looked at some of the repairs since there was an article proclaiming a 2.5 million dollar fix recently. To be honest I couldn't see much in the way of improvement. There is still rotten wood, Failing poles, shoddy repairs and bomb trains rolling within a few feet of peoples homes.

Rotten wood right under the 1267 placard.

Makeshift repairs

I'd like to give a huge shout-out to Thomas Kahlert my pilot for the day.

He is one of the best I have flown with. An ex-Army forward air controller of 40 years experience, he really knew his plane. 

 

Also a big thanks to SouthWings for arranging this and so many flights in the past. It would be impossible to do this work without help and they are without a doubt my angels in the skies!