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US Coal Companies Contura Energy and Alpha Natural Resources Amend Merger Deal
Friday 28 September 2018

28 September 2018 - US-based coal companies Contura Energy, Inc. (OTC: CNTE), along with ANR, Inc. and Alpha Natural Resources Holdings, Inc. (OTC: APNR) have entered into an amended and resaid merger agreement, providing an increase in merger consideration to Alpha stockholders and the payment of a special dividend by Alpha, the companies said.

Earlier this year, the companies entered into a definitive merger agreement providing for an all-stock transaction to create a US metallurgical coal platform and thermal coal portfolio.

Under the original deal, Alpha shareholders would receive 0.4071 Contura common shares for each ANR, Inc. Class C-1 share and each Alpha Natural Resources Holdings, Inc. common share they own, representing approximately 46.5% ownership in the merged entity.

Under the terms of the amended and resaid agreement, Alpha stockholders will receive 0.4417 Contura common shares for each ANR, Inc.

Class C-1 share and each share of common stock of Alpha Natural Resources Holdings, Inc. they own, representing approximately 48.5% ownership in the merged entity.

Prior to the closing of the transaction, Alpha stockholders will also receive a special cash dividend in an amount equal to USD 2.725 for each Class C-1 share and each share of common stock of Alpha Natural Resources Holdings, Inc. they own.

Stockholders of Alpha, who collectively hold approximately 38% of the shares of common stock of Alpha Natural Resources Holdings, Inc. and approximately 35% of the shares of ANR, Inc.

The transaction, the amended terms of which have been unanimously approved by the boards of directors of all parties, is expected to close in 4Q18, subject to Alpha stockholder approval and the satisfaction of other customary conditions.

Class C-1 common stock, have entered into voting and support agreements, pursuant to which such stockholders have agreed to vote their shares in favour of the transaction, subject to the terms and conditions of the voting and support agreements.

Formed by a group of Alpha's former first lien lenders, Contura launched in July 2016 with an initial acquisition of certain coal assets from Alpha Natural Resources, Inc., concurrent with Alpha's emergence from its Chapter 11 reorganisation process and as confirmed by the US Bankruptcy Court for the Eastern District of Virginia. Contura and Alpha have since operated independently, though Contura has purchased and resold to overseas customers a portion of Alpha's produced metallurgical coal tonnage.

Since its launch, Contura has taken a number of actions to strengthen its balance sheet, including refinancing its debt, growing its Trading and Logistics platform, and divesting its two Powder River Basin thermal mines in December 2017.

Since its emergence from bankruptcy, Alpha too has taken steps to both streamline its capital structure and divest certain higher-cost, active and idle operations through targeted asset divestments.

Post-merger, Contura's assets will primarily be comprised of a diversified production profile of high-quality, metallurgical and thermal coal mines in Central Appalachia, its highly efficient longwall thermal coal mine in Northern Appalachia, one of the largest met coal reserves in the US allowing for near-term organic growth opportunities, and export capacity through its 65% ownership interest in the Dominion Terminal Associates coal export facility located in Newport News, Virginia.

On a pro-forma basis for the full-year 2017, the combined entity sold approximately 12.6m tons of metallurgical coal and 13.8 m tons of thermal coal, excluding sales from divested assets.

Contura Energy is a private, Tennessee-based coal supplier with affiliate mining operations across major coal basins in Pennsylvania, Virginia and West Virginia.

Alpha Natural Resources has affiliate mining operations in seven counties in West Virginia, and supplies metallurgical coal to the steel industry and thermal coal to generate power.

The company has offices in Bristol, Tennessee, and Julian, West Virginia, which support approximately 20 active mining operations. Alpha is committed to being a leader in mine safety and an environmental steward in the communities where its affiliates operate.

Contura is being advised by Ducera LLC, Davis Polk and Wardwell LLP, and Jefferies LLC. Alpha is being advised by Moelis and Company LLC and Katten Muchin Rosenman LLP.
Date Published: 28/09/2018
Target: ANR, Inc. and Alpha Natural Resources Holdings
Country: USA
Deal Size: 721.46m (USD)
Sector: Petroleum/Natural Gas/Coal
Type: Merger
Financing: Stock
Status: Agreed
Buyer: Contura Energy
Buyer Advisor: Ducera , Davis Polk and Wardwell , Jefferies