Coal Producer, Warrior Met Coal LLC, Shows Weakness Ahead Of IPO

Summary

Warrior Met Coal LLC (Pending:HCC) filed an S-1/A with the Securities and Exchange Commission on April 3, 2017, for its upcoming initial public offering. The company intends to sell 16,666,667 shares at a marketed price range of $17 to $19. The company has an additional 2.5 million shares as an overallotment option for its underwriters. Assuming it prices at the mid-point of its price range, the company will have a market cap value of $1.00B and trade at a price/sales multiple of 2.73x.

Warrior Met Coal LLC was formed to acquire the assets of Walter Energy, through the predecessor’s bankruptcy filing. The company will not receive any of the proceeds from its IPO. Instead, the proceeds will be paid to its selling stockholders.

The underwriters for the IPO include: Credit Suisse, Citigroup, Morgan Stanley, BMO Capital Markets, RBC Capital Markets, Apollo Global Securities, Clarksons Platou Securities and KKR.

Business overview

Warrior Met Coal LLC is an exporter and producer of premium coal. It is based in Brookwood, Alabama and operates two mines it characterizes as highly productive in the state. The company reports that it is the largest seaborne met coal provider in the Atlantic Basin and among the top 10 suppliers globally. The two mines have an estimated annual production capacity of 7.3 million metric tons of coal and approximately 107.8 million metric tons of recoverable reserves.

(S-1/A)

Executive management

The chief executive officer and a director of Warrior Met Coal LLC is Walter J. Scheller III. Previously, he served as the CEO of Walter Energy from Sept. 2011 to March 2016, the predecessor company that was acquired by Warrior Met Coal LLC in 2016. Scheller also served as the chief operating officer of Jim Walter Resources Inc. from June 2010 to Sept. 2011.

Scheller has more than 32 years of experience in the mining industry and has served in numerous executive roles at different companies. He holds a Juris Doctor from Duquesne University, a Master of Business Administration from the University of Pittsburgh and a Bachelor of Science in mining engineering from West Virginia University.