In a March 11 letter to shareholders announcing the mailing of proxy statements for its April 25 annual meeting, the company outlined its progress to advance its strategic plan, part of which would include such decisions.
“The board and management are intensely focused on maximizing the value of your investment in the company,” board chairman Michael Tokarz and chief executive officer Walter Scheller III said.
“We are committed to pursuing operational and financial initiatives that will support and accelerate our efforts – including, if value creating, further reducing production at any underperforming mines and exploring non-core asset sales."
In the meantime, the two said Walter had overseen a “significant increase” in production at its mines while taking steps to materially reduce operating costs.
The producer also noted it was making a disciplined execution of its business plan to achieve its objectives.
“Our progress should not be interrupted by the efforts of Julian Treger's UK hedge fund, Audley Capital, which, with less than 1% of the company's shares and no articulated plans for delivering shareholder value, has said it intends to seek 50% of the company's board seats,” the officials said.
“We do not believe it is in our shareholders' best interest to risk jeopardizing our strong operational momentum as our efforts gain traction. Your board has been instrumental in driving and supporting Walter Energy's new leadership and business initiatives … [and] now is not the time for change to our company's leadership that could derail that progress.”
The company highlighted its successes over the past 18 months, including an increase in met coal by 35% to a record 11.7 million tonnes while reducing total reportable injuries by 26% from 2011 as well as a 6% improvement in average met coal cash cost per ton of production in 2012 compared to 2011 and 20% in the fourth quarter of 2012 compared to the fourth quarter of 2011.
Walter has curtailed production at its low-margin mines by more than 1Mt and transitioned the Brule and Willow Creek operations from contractor-operated to owner-operated.
“As we enter 2013, we have the capacity to produce in excess of 15Mt of high quality met coal in our existing operations when market conditions warrant,” the company said.
“We also continue to drive greater efficiencies throughout our business and seize opportunities to generate greater cash flow to improve our financial flexibility and continue development of our new Blue Creek Energy Mine in Alabama.”
Both Audley and Walter have sent proxy cards for board voting. Walter has urged the return of its own white proxy statements with votes.