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US Coal Company Alpha Wins Shareholder Nod for Contura Energy Merger
Thursday 08 November 2018

8 November 2018 - Shareholders of Tennessee, US-based coal company Alpha Natural Resources Holdings, Inc have approved the company's planned merger with US-based coal company Contura Energy, Inc. (OTC: CNTE), the companies said.

The 26 September deal is expected to close on 9 November.

Under the terms of an 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 of record as of November 7, 2018 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.

The payment date for the special cash dividend is November 8, 2018, and the transaction is expected to close on 9 November, subject to the satisfaction of customary conditions.

The resulting combination is expected to enhance competitive positioning and generate meaningful cost synergies in the range of USD 30m to USD 50m annually, including through coal blending optimisation as well as purchasing, operating, administrative, and capital allocation efficiencies.

The combined entity will retain the Contura Energy name and be led by Contura's existing management team, with Kevin Crutchfield continuing as chief executive officer. Alpha's chairman and chief executive officer, David Stetson, will resign his role and transition to the Contura board. 

Immediately after closing, the Contura board will be composed of the five existing Contura directors as well as the following four individuals who currently serve on Alpha's board: David Stetson, Daniel Geiger, John Lushefski, and Harvey Tepner.

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.
Details
Date Published: 08/11/2018
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
Vendor:
Buyer: Contura Energy
Buyer Advisor: Ducera , Davis Polk and Wardwell , Jefferies
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