A new global coal mining giant is in the making.
Western Coal Corp, located in Vancouver, BC, has entered talks with Walter Energy, a leading US producer and exporter of hard coking coal for the global steel industry. The deal would be worth about $3.3 billion.
The merger would create one of the world’s largest producers of metallurgical coal with geographically diversified assets in Canada, the US and the UK and with strong market positions in Asia, South America, North America and Europe.
"From a strategic perspective, a transaction with Western Coal would be transformational for our company," said Joe Leonard, Interim Chief Executive Officer of Walter Energy.
"The combined company would be the leading, publicly-traded 'pure-play' metallurgical coal producer in the world, with unique and strategic access to steel producing markets in both the Atlantic and Pacific Basins. The transaction would meaningfully diversify both companies' operating and development portfolios and provide new business opportunities which might not be available to either company on a standalone basis. The combined company would also be well positioned to participate in further strategic growth opportunities."
The transaction would be affected by way a statutory plan of arrangement pursuant to the Business Corporations Act (British Columbia), in compliance to Canada Business Corporations Act.
The combined company would have total coal reserves of approximately 385 million tons, based on the most recent disclosures by Walter Energy and Western Coal. Walter Energy currently produces approximately 7.0 million tons of premium metallurgical coal, with organic expansion plans expected to increase that number to up to 9.5 million tons in 2012.
Western Coal expects to produce a total of 6.7 million tons of coal in the fiscal year ended March 2011 and has growth plans to achieve 11.0 million tons of total coal production during fiscal year ended March 2013.
Walter Energy Interim CEO Joe Leonard will brief investors and other interested parties this morning, Nov. 18, 2010, at 9 a.m. Eastern Standard Time, during a listen-only conference call and Webcast.
Source: Walter Energy
