Alpha touts ‘compelling’ benefits of Massey buy

January 31, 2011 by Ken Ward Jr.

Officials from Alpha Natural Resources just finished up a nearly 90-minute conference call in which they promoted their purchase of Massey Energy to industry stock analysts.

You can check out an audio replay of the event online, and they also have a slide show that includes some facts and figures about the transaction here. Among the highlights:

— The combined Alpha-Massey company will rank 2nd in many measures of U.S. coal producers — including production, coal reserves and earnings — behind only Peabody Energy. The combined company will hold 5.1 billion tons of reserves.

— Alpha plans to keep its existing management team and board of directors in place, but may offer a position as some sort of consultant or adviser to Baxter Phillips, a longtime Massey executive who took over as CEO when Don Blankenship retired last month.

— The transaction creates a combined company valued at about $15 billion. Approvals are still needed from the Federal Trade Commission and the shareholders of both companies.

— Once finalized, the merger creates a giant among companies that produce steel-making coal, with 40 million tons of annual production and $1.7 billion tons of reserves.

Much of the discussion focused on Alpha touting the “synergies” of this merger and all of the reasons its executives want Wall Street to look kindly upon it, driving up stock prices, etc.

Kevin Crutchfield, Alpha’s CEO, touted the “undeniable and compelling strategic financial benefits” of his company’s buyout of Massey. Baxter Phillips of Massey added:

The combination of Alpha and Massey is the best way forward for both companies. The combined entity will be a true industry leader.

Interestingly, Phillips also said:

We have found cultures to be extremely compatible with each other.

Phillips also said:

We both have a thorough understanding of the regulatory complexities facing [Central Appalachian]  producers and the combined company will be ideally suited to address the myriad of issues currently facing the Central Appalachian region.

We will work together the enhance the combined entity’s safety and environmental record, reduce regulatory impediments, improve operating performance and maximize shareholder value.

Crutchfield touted his company’s “Running Right” program for environmental and safety issues:

This approach does not make us perfect … but it does make us strive for perfection.

We continue to consistently exceed our internal safety targets. From a safety perspective, running right means engaging all of our employees to work toward the common goal of returning every employee home safety every day. This is and always has been our top priority.

From an environmental  perspective running right means a collective commitment on the part of our entire workforce to not only remain in compliance with, but often exceed, regulatory environmental standards in leaving the environment in a condition that is at least as good or better than we found it.

On the issue of the Upper Big Branch Mine Disaster, Alpha officials said that they spent a fair amount of time reviewing Massey Energy’s estimates of the disaster’s financial costs to the company and were able to “get comfortable with the risk” associated with those costs.

Crutchfield, the Alpha CEO, said:

It was a tragic event and what we would hope for is resolving the matter in the foreseeable future.

7 Responses to “Alpha touts ‘compelling’ benefits of Massey buy”

  1. charlie says:

    “regulatory environmental standards in leaving the environmental in a condition that is at least as good or better than we found it.”

    The leaving it better part is what was funny to me, they cant bring back the natural eco system once its been destroyed. Already they stretch the truth.

  2. Amanda Starbuck says:

    I heard Kevin Crutchfield speak on the call about “reducing regulatory impediments”. Does this mean that Alpha intends to work/lobby to weaken the enforcement of the Clean Water Act, only just as things are starting to improve in that respect? I suspect so.

  3. Ken Ward Jr. says:

    No, Amanda, I believe — as noted in my blog post — those remarks about reducing regulatory impediments came from Baxter Phillips of Massey Energy.

  4. Amanda Starbuck says:

    Thanks for that clarification Ken. Do you think there is any difference of opinion between Alpha and Massey on this point (reducing regulatory impediment)?

  5. Ken Ward Jr. says:

    Amanda,

    What I “think” doesn’t really matter much. I tried to ask Alpha about that, but their PR people didn’t return my calls today.

    However, it is interesting to note that Alpha has a “Chief Sustainability Office” … http://www.alphanr.com/bios/Pages/MichaelPeelish.aspx … I am not aware of other coal companies with that particular job title.

    Ken.

  6. Monty says:

    What will be telling will be the upper management structure of Alpha six months from now – how many, if any, Massey people are far enough up in the ranks to be able to make decisions – or if they have all be either bought out, forced out, or otherwise shoved aside. Sometimes the only way to change a corporation’s culture, especially one as centered on one individual’s personality as Massey’s was, is to burn the house down and start from scratch.

    Otherwise, you’re just going to have the same issues, problems, and skeletons in the closet. I am guessing, and hoping, that Alpha doesn’t want that.

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