Walter Energy Inc.’s senior-most creditors are entering confidential talks with the coal miner to reorganize it in bankruptcy court and hand ownership to the lenders, Bloomberg News reported today. The group, which owns the company’s first-lien bonds and loans, will submit a draft plan to the company that calls for converting their debt into equity. Walter, which last generated an annual profit in 2011, has been discussing a reorganization since April as it struggles with a $3.1 billion debt load amid the worst downturn for coal in decades. Prices of metallurgical coal have been undermined by excess supply and slowing demand from China.
