ST. LOUIS, June 15, 2011 /PRNewswire/ -- Arch Coal, Inc.
(NYSE: ACI) ("Arch" or "the company") announced today that it has
completed its acquisition of International Coal Group, Inc. (NYSE:
ICO) ("ICG") through a merger, with ICG becoming a wholly owned
subsidiary of Arch. Prior to the merger, Arch acquired
approximately 92 percent of ICG's outstanding shares of common
stock in connection with its previously disclosed tender offer.
The aggregate value of the transaction totaled $3.4 billion, excluding costs associated with the
redemption of ICG's outstanding debt and fees related to the
transaction.
"We are pleased with the swift and successful completion of the
ICG transaction, which will add tremendous value for Arch's
stakeholders in the coming years," said Steven F. Leer, Arch's chairman and chief
executive officer. "This acquisition extends Arch's reach
into every major U.S. coal supply basin, enhances our low-cost and
leadership position in core operating regions and creates a
world-class global thermal and metallurgical coal franchise poised
for growth."
With expected pro forma metallurgical sales of 11 million tons
in 2011, Arch becomes the second largest U.S. metallurgical coal
producer and a top 10 global supplier to steelmakers. By
capitalizing on expansion opportunities, Arch expects to boost its
metallurgical coal output to nearly 15 million tons by 2015 to
serve under-supplied, growing global metallurgical markets.
The acquisition also adds nearly 13 million tons of low-cost
Appalachian thermal production to Arch's vast domestic thermal coal
portfolio, solidifying the company's No. 2 position among
U.S.-based coal miners and creating the U.S. coal industry's most
diversified producer. Additionally, the company expects to
leverage its dedicated throughput capacity, logistics capabilities
and strategic relationships to expand export shipments via the East
Coast, West Coast and Gulf of
Mexico to further penetrate and participate in the global
growth markets.
"With the addition of ICG, Arch will possess one of the
industry's most geographically diverse and strategically balanced
operating profiles – with EBITDA nearly evenly split between
eastern and western regions and between metallurgical and thermal
markets," said Leer. "The combined entity will also provide a
powerful foundation upon which to build out metallurgical and
thermal volumes geared towards serving the domestic and
international coal trade."
As a result of the acquisition, Arch's coal reserves will
increase 25 percent to reach 5.5 billion tons (pro forma as of
Dec. 31, 2010), making it the second
largest reserve holder in the United
States. At least 431 million tons of those reserves
are characterized as metallurgical quality – comprised of low
volatile coal, high volatile "A" and "B" coals as well as
pulverized injection coal – giving Arch one of the most extensive
and highest quality metallurgical coal reserve bases in the U.S.
coal industry.
"We believe this acquisition – the largest in company history –
offers a compelling value proposition for our employees, our
customers and our investors," said Leer. "The combined
company will serve a broad mix of power producers, steelmakers and
industrial accounts here and around the world – offering a vast
metallurgical and thermal coal product slate and a wide range of
logistical options for delivery."
Upon integration, Arch will operate 24 mining complexes across
five U.S. coal supply basins, with planned pro forma coal sales of
171 million to 176 million tons in 2011. The company will
employ roughly 7,400 people and expects pro forma 2011 revenues of
more than $5 billion.
Arch currently estimates that the transaction will create
synergies of $70 million to $80
million annually, beginning in 2012. "We expect to
integrate ICG quickly over the next three to six months and should
fully realize the target synergies in the first full year of
operation," said John W. Eaves,
Arch's president and chief operating officer. "In fact, we
have begun executing on our integration plans, which center on
improving the combined company's cost structure, exceeding the
forecasted synergies and accelerating metallurgical coal
development projects."
Aiding a smooth and fast integration process are the
complementary management styles and workforces at Arch and ICG.
Both companies share a deep commitment to workplace safety,
environmental stewardship and the creation of shareholder value.
Furthermore, the combined entity will boast a highly
productive workforce with minimal legacy liabilities.
Arch financed the purchase of ICG with a combination of new debt
and equity offerings completed in June. "The company
successfully executed capital markets transactions to help
prudently finance the acquisition, retain our existing credit
ratings and preserve a strong balance sheet," said John T. Drexler, Arch's senior vice president
and chief financial officer. "Looking ahead, our ability to
accelerate future development projects and bring forward those cash
flows, while maintaining a low-cost operating structure across our
regions, should unlock further value for the company and its
stakeholders."
In the company's second quarter 2011 earnings release and
conference call, which is typically scheduled in late July or early
August, Arch anticipates providing earnings guidance for the
combined entity as well as a preliminary update on the purchase
price allocation, synergy targets and estimated costs for the
completion of the ICG transaction and its integration.
U.S.-based Arch Coal is a top five global coal producer and
marketer as well as the most diversified American coal company,
with 24 mining complexes across five U.S. coal supply basins.
The company supplies cleaner-burning, low-sulfur thermal and
metallurgical coal to power generators and steel manufacturers on
four continents.
Forward-Looking Statements: This press release contains
"forward-looking statements" – that is, statements related to
future, not past, events. In this context, forward-looking
statements often address our expected future business and financial
performance, and often contain words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," or "will."
Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. For us, particular
uncertainties arise from changes in the demand for our coal by the
domestic electric generation industry; from legislation and
regulations relating to the Clean Air Act and other environmental
initiatives; from operational, geological, permit, labor and
weather-related factors; from fluctuations in the amount of cash we
generate from operations; from future integration of acquired
businesses; and from numerous other matters of national, regional
and global scale, including those of a political, economic,
business, competitive or regulatory nature. These
uncertainties may cause our actual future results to be materially
different than those expressed in our forward-looking statements.
We do not undertake to update our forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required by law. For a description of some
of the risks and uncertainties that may affect our future results,
you should see the risk factors described from time to time in the
reports we file with the Securities and Exchange
Commission.
SOURCE Arch Coal, Inc.