By Joel McKay
One of B.C.’s biggest coal bosses has thrown in the towel just months after a major promotion and a $3.3 billion takeover deal.
On June 30, Tampa-based Walter Energy (NYSE:WLT) announced the resignation of CEO Keith Calder, the former president and CEO of Western Coal, which operated three steel-making coal mines in northeast B.C. before Walter bought it in April.
The sudden departure of the Vancouver-based executive surprised many in the industry who, just months before, were happy to see the leader of the smaller B.C. company take the helm at the much larger U.S. firm.
Calder said he resigned due to “differences of opinion concerning management philosophy.”
Days before his resignation, Calder sat down with Business in Vancouver for a one-on-one interview to discuss his plans for the company.
At the time, the 50-year-old executive said he had no plans to leave the company.
“I’m happy with where I am … this is the role that I should be in,” Calder told BIV.
His departure followed an extensive search and interview process for a new chief executive after Walter’s previous CEO, Victor Patrick, retired in March 2010.
The resignation comes at a critical time for the company as it attempts to integrate its Canadian, U.S. and U.K. operations under one banner.
Davenport & Co. LLP, a Virginia-based research firm, downgraded its Walter Energy rating to “neutral” from “buy” following Calder’s resignation.
Analyst Christopher Haberlin said the downgrade was a result of Davenport’s outlook on coal prices, Walter’s ongoing production challenges and a “lack of stability” at the CEO level.
Haberlin told BIV there had been some speculation in the market that Calder’s exit was related to a potential sale of the company, though there’s no evidence to support that claim.
Calder, who’s known for his no-nonsense approach to business, told BIV in June the company has plenty of growth opportunities through its existing line of projects.
“One of the great things about where we are right now is we don’t have to make an acquisition … which is a fantastic situation to be in,” said Calder.
He later added that his three-year goal for the company was to transform it into a major global metallurgical coal producer.
He said there are four “aces” a company needs to become a major global met coal producer – Asia, South America, Western Europe and India.
Each ace represents a market for coal products.
Calder said Walter already sells in Asia, South America and Western Europe.
“We are not in India yet … it would be great to get the India ace but only if it makes sense,” he said.
Haberlin suggested Calder’s departure opens Walter up to hostile takeover bids.
“In our view, stability at the CEO position is needed now more than ever as Walter integrates the acquisition of Western and moves forward on its plan to grow met coal production,” Haberlin wrote in a research note.
Jackie Przybylowski, an analyst with Scotia Capital, agreed that Calder’s exit creates risk that the integration of Walter and Western Coal could be delayed, but she didn’t change her rating for the company.
“We do not expect any material alteration to Walter Energy’s operating strategy at this time,” Przybylowski wrote in a note to investors.
During his time at Western Coal, Calder adopted an aggressive growth strategy that saw the company re-open its Willow Creek mine in B.C. two months ahead of schedule, among other things.
Prior to Western, Calder was managing director of global mining giant Rio Tinto’s (NYSE:RTP) copper portfolio.
Allen Wright, president and CEO of the Coal Association of Canada, said Western had been one of the “rising stars” in this country’s coal sector.
“I’ve watched Keith over the last little while and I think he’s brought some stability to the company,” said Wright. “I’m sorry to see him go.”
Calder is expected to stay on as CEO until July 31, when Joe Leonard will, for the second time, be named interim CEO.
Walter has already hired executive search firm Spencer Stuart to find a new CEO.
Walter spokeswoman Nina Ng said Calder’s departure wouldn’t affect the company’s operations.
“It’s business as usual and that’s how we’re working,” said Ng.
At press time, Walter’s shares were valued at $111.56.
Tampa, FL
CEO: Keith Calder
Employees: 4,000
Market cap: $6.5b
P/E ratio: 14.30
EPS: $7.95
Sources: Stockwatch, Google