Walter to pay Oct. 1 interest in cash, in kind on 11%/12% PIK notes

By Susanna Moon

Chicago, Sept. 22 – Walter Energy, Inc. has opted to pay interest for the period beginning Oct. 1 on its 11%/12% senior secured second-lien pay-in-kind toggle notes due 2020 with half in cash and the rest in kind, according to an 8-K filing with the Securities and Exchange Commission.

The company will pay interest of about $9.6 million in cash and about $10.5 million in kind.

The company is permitted under the notes indenture to elect, for any interest payment period prior to Oct. 1, 2019, to use the payment-in-kind feature of its toggle notes.

The company may pay interest on the notes entirely in cash at a rate of 11% or, if it uses the PIK feature, with a 50%/50% or 75%/25% combination of (i) cash interest and an increase in the principal amount of the notes outstanding or an issue of additional notes at an annual rate of 12%.

The company said it intends to evaluate this option before the beginning of each interest period, taking into account market conditions and other relevant factors at that time.

On April 1, 2015, the company will pay 50% of the interest payment in cash and the remainder in kind.

Walter Energy is a Birmingham, Ala.-based pure-play metallurgical coal producer.

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