We are thoroughly convinced that Walter Energy (NYSE:WLT) won't survive 2015. After issuing almost $1.8B in new debt from 2013 & 14, we believe that the credit market is saturated for WLT, and additional issues would require a prohibitively high interest rate. A company that's offering PIK toggle notes has almost certainly exhausted all other debt options. If we assume that further capital injections are unlikely for WLT, it's easy to see that the company will burn through its $468.5M cash pile in the coming months. $250M+ in cash interest is due in 2015 alone, and the company's mines are still yielding operational losses. Competitors can produce and ship a ton of met coal several dollars per ton cheaper than WLT, too. We do expect a bankruptcy filing from Walter Energy in the next quarter or two. The time is drawing near.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.