Coal Tattoo

Alpha touts ‘compelling’ benefits of Massey buy

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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.