ST. LOUIS, April 2, 2008 /PRNewswire-FirstCall/ -- Patriot Coal
Corporation (NYSE: PCX) today announced that it has signed an agreement to
acquire Magnum Coal Company ("Magnum"). Magnum is one of the largest and
lowest-cost coal producers in Central Appalachia, operating 12 mines and
7 preparation plants. Magnum sold 18.4 million tons of coal in 2007 and has
over 600 million tons of proven and probable reserves in southern West
Virginia.
"This transaction fits squarely with Patriot's strategy of growing through
synergistic, accretive acquisitions, particularly in the fragmented Central
Appalachian region. Magnum further strengthens our metallurgical coal
position and expands our thermal coal presence in the important CAPP region,
provides both current production and valuable reserves for future expansion,
and is expected to be highly accretive within the first year. Importantly,
Magnum shares with Patriot a strong emphasis on the safety of its miners,"
said Patriot President and Chief Executive Officer Richard M. Whiting.
"Magnum's significant presence and expertise in surface mining will further
diversify Patriot's extensive asset base. With the addition of Magnum,
Patriot will be positioned as the second largest coal producer in CAPP and the
seventh largest in the U.S. overall."
Under the terms of the agreement, Magnum stockholders will receive
approximately 11.9 million shares of newly-issued Patriot Coal common stock.
Additionally, Patriot will assume net debt estimated at $150 million, bringing
the total acquisition price to approximately $709 million based on the
April 2, 2008 closing price of Patriot common stock. While bridge financing
has been arranged, the Company expects to have permanent financing in place by
closing. The acquisition is subject to certain regulatory approvals, approval
by Patriot stockholders and customary closing conditions. The proposed
transaction is expected to be completed around mid-year.
On a pro forma basis, the combination of Patriot and Magnum would have
sold more than 40 million tons in 2007 and generated revenues of just under
$2.0 billion. Proven and probable reserves on a combined basis will exceed
1.9 billion tons. The combined assets will provide Patriot a more balanced
production mix, with approximately 70% underground and 30% surface mining.
With a strong base of low-sulfur thermal coal and growing production of
metallurgical coal, Magnum's properties are in close proximity to Patriot's
Central Appalachian properties, thereby enabling cost-effective optimization
of the combined assets.
"The transaction is expected to provide substantial commercial and
operational synergies," said Whiting. "It will create economies of scale,
enhance our product line, grow our customer base, provide more transportation
options, and accelerate our brokerage and trading activities. We look forward
to completing this transaction as soon as possible and welcoming Magnum's
1,700 highly-skilled employees to the Patriot team."
"We believe this presents a unique opportunity to consolidate two
significant, complementary coal companies, achieving the benefits of scale and
diversity that we believe are critical to further industry consolidation and
long-term success in the coal sector. The combination of talent from these
two management teams will create a premier organization to manage and grow the
enterprise," said Robb E. Turner, Chairman of Magnum and Senior Partner of
ArcLight Capital Partners, LLC, majority stockholder of Magnum. "We invest
opportunistically across the entire energy industry and are particularly
excited about the prospect of expanding our participation in the coal sector
via an investment in Patriot." Following the closing, ArcLight will own
approximately 16% of Patriot shares, and Magnum's other stockholders will own
a combined 15% interest.
Lehman Brothers acted as financial advisor to Patriot and Citi acted as
financial advisor to Magnum for this transaction.
Conference Call
Management will hold a conference call to discuss the proposed acquisition
on April 3, 2008 at 10:00 a.m. Central Daylight Time. The conference call can
be accessed by dialing 800-398-9398, or through the Patriot Coal website at
http://www.patriotcoal.com. International callers can dial 612-332-0335 to
access the conference call. A replay of the conference call will be available
on the company's website and also by telephone, at 800-475-6701 for domestic
callers or 320-365-3844 for international callers, passcode 918325.
About Patriot Coal
Patriot Coal Corporation (the "Company") is a leading producer and
marketer of coal in the eastern United States, with ten company-operated mines
and numerous contractor-operated mines in Appalachia and the Illinois Basin.
The company ships to electric utilities, industrial users and metallurgical
coal customers, and controls approximately 1.3 billion tons of proven and
probable coal reserves. The company's common stock trades on the New York
Stock Exchange under the symbol PCX.
Important Information for Stockholders
The Company will file a proxy statement/prospectus with the Securities and
Exchange Commission (the "SEC") in connection with the proposed issuance of
Company common stock in the transaction with Magnum. Investors and
stockholders are urged to read the proxy statement/prospectus when it becomes
available and any other relevant documents filed with the SEC because they
will contain important information about the proposed issuance. Investors and
stockholders may obtain these documents free of charge at the website
maintained by the SEC at www.sec.gov. In addition, documents filed with the
SEC by the Company are available free of charge by contacting investor
relations by phone at (314) 275-3680, in writing to Janine A. Orf, Director of
Investor Relations, or by email to jorf@patriotcoal.com. The final proxy
statement/prospectus will be mailed to stockholders.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of such jurisdiction.
The Company and its directors and executive officers and other members of
management and employees may be deemed to be participants in the solicitation
of proxies from the stockholders of the Company in connection with the
proposed issuance. Information about the Company's directors and executive
officers is set forth in the Company's Annual Report on Form 10-K for the year
ended December 31, 2007 filed with the SEC on March 14, 2008 and in the
Information Statement filed as Exhibit 99.1 to the Report on Form 8-K filed by
the Company with the SEC on October 24, 2007. Additional information
regarding the interests of such potential participants will be included in the
proxy statement/prospectus and the other relevant documents filed with the SEC
when they become available.
Forward Looking Statements
Certain statements in this press release are forward-looking as defined in
the Private Securities Litigation Reform Act of 1995. These statements
involve certain risks and uncertainties that may be beyond our control and may
cause our actual future results to differ materially from expectations. We do
not undertake to update our forward-looking statements. Factors that could
affect our results include, but are not limited to: failure to obtain Company
stockholder approval of the proposed issuance; failure to obtain, delays in
obtaining or adverse conditions contained in any required regulatory or other
approvals; availability and cost of financing; failure to consummate or delay
in consummating the transaction for other reasons; changes in laws or
regulations; changes in general economic conditions, including coal and power
market conditions; the outcome of commercial negotiations involving sales
contracts or other transactions; the Company's dependence on Peabody Energy
Corporation in the near future; geologic, equipment and operational risks
associated with mining; supplier and contract miner performance and the
availability and cost of key equipment and commodities; the Company's ability
to replace coal reserves; labor availability and relations; availability and
costs of transportation; weather patterns affecting energy demand; legislative
and regulatory developments; risks associated with environmental laws and
compliance; the outcome of pending or future litigation; and the availability
and costs of competing energy resources. The Company undertakes no obligation
(and expressly disclaims any such obligation) to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise. For additional information concerning factors that could
cause actual results to materially differ from those projected herein, please
refer to the Company's Form 10-K and 8-K reports.
SOURCE Patriot Coal Corporation
-0- 04/02/2008
/CONTACT: Janine Orf of Patriot Coal Corporation, +1-314-275-3680/
/Web site: http://www.patriotcoal.com /
(PCX)
CO: Patriot Coal Corporation; Magnum Coal Company
ST: Missouri
IN: UTI OIL MNG
SU: TNM CCA
EC-AH
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8602 04/02/2008 17:52 EDT http://www.prnewswire.com
