How will the increased commitment and extended term of the ABL facility affect Warrior Met Coal's liquidity and leverage ratios?

Liquidity impact

The amendment raises the ABL line to $143 million – a roughly 24 % lift from the prior $116 million – and adds a longer repayment schedule. For a company that is heavily capital‑intensive (thermal‑coal mining and processing) this extra cash‑reserve expands its available‑to‑borrow (ATB) capacity and pushes its current‑ratio and cash‑conversion‑cycle buffers upward. In practice, analysts will now view Warrior’s short‑term liquidity as more resilient, especially in a market where seasonal swing‑trade volumes or price‑depression in coal can strain cash flow. The extended maturity reduces the frequency of large required annual amortisations, further easing near‑term cash‑outflows.

Leverage ratios

Warrior’s net‑debt‑to‑EBITDA and debt‑to‑assets metrics will improve because the new facility is asset‑backed and can be drawn down without adding immediate “hard‑‑cost” debt. Even if the company taps the full $143 million, the loan sits against its existing asset base, so the incremental leverage is muted relative to an unsecured term loan. Consequently, the debt‑to‑EBITDA ratio should drift lower (or at least stabilize) and the company’s interest‑coverage ratio will have a slightly larger cushion, mitigating the risk of covenant breaches.

Trading implications

The market will likely price in a modest credit‑quality upgrade, trimming the risk premium on Warrior’s equity. Expect a bullish short‑term bias: the stock could earn 2–4 % upside as the liquidity narrative eases concerns about solvency and potential downgrades. However, the benefit is bounded—cash‑flow generation still hinges on coal prices, which remain volatile. Keep a tight stop just below recent support (around $5.90) and consider a partial position rather than a full‑scale long, given the sector‑wide demand risk. If the draw‑down of the facility is limited and earnings beat expectations, the upside can be reinforced; a rapid, large draw‑down that erodes cash flow would neutralize the liquidity gain and re‑expose leverage pressure.