OREANDA-NEWS. Walter Energy will delay interest payments on certain senior secured notes by 30 days, the latest step in its efforts to remain solvent.

The company said today that it is exercising the grace period for payments due 15 June on its 9.875pc senior notes due in 2020. It used similar provisions in April to put off interest payments on notes due in 2019 and 2021.

The US-based coking and thermal coal producer is working with its debt holders "to establish a capital structure that will position the company to weather a highly competitive and challenging market." It will continue to meet sales commitments.

Walter will have to make the \$19.2mn interest payment by 15 July to keep the 9.875pc noteholders from potentially filing a notice of default. Loan terms call for the company to make payments in June and December excluding the 30-day grace period.

Walter has just under \$3.1bn in outstanding loans, including \$388mn of the 9.875pc senior notes. It had \$435mn in cash and investments as of 31 March.

Walter warned in April that if it could not agree with its lenders to restructure debt it may have to file for Chapter 11 bankruptcy protection. It issued layoff warning notices to 370 employees of its Mine No. 7 and related operations on 15 May because of weak global market conditions.

The company is the most prominent US "pure play" coking coal producer and so is the most exposed to the collapse in coking coal prices, which have fallen to \$87.50/metric FOB Australia, the industry standard for low-volatile hard coking coal, from above \$330/t in 2011.

Walter's coking coal sales in the first quarter fell to 2.3mn t from 2.6mn t in the same period last year. Its average selling price in the quarter was \$106.35/t, down from \$127.29/t a year earlier.

Thermal coal sales fell to 140,000t from 343,000t a year earlier.