16:57:36 EST Sun 16 Jan 2022
Enter Symbol
or Name
USA
CA



Western Coal Corp
Symbol WTN
Shares Issued 346,525,267
Close 2010-11-17 C$ 7.38
Recent Sedar Documents

Western Coal, Walter Energy arrange combination

2010-11-18 03:56 ET - News Release

Mr. David Jan reports

WESTERN COAL ENTERS INTO EXCLUSIVE NEGOTIATIONS FOR POTENTIAL BUSINESS COMBINATION WITH WALTER ENERGY

Western Coal Corp. has entered into an exclusivity agreement with, and received a proposal regarding a strategic business combination from Walter Energy Inc., a leading United States producer and exporter of hard coking coal for the global steel industry.

If concluded, the combination proposal contemplates a plan of arrangement transaction whereby Western shareholders would receive a mixture of cash and Walter shares valued at $11.50 per Western share. The proposed value represents a premium of 55.8 per cent to Western's closing price yesterday of $7.38 on the Toronto Stock Exchange. The proposal values Western's equity at $3.3-billion, based on Western's 291.1 million common shares outstanding on a fully diluted basis (excluding common shares held by wholly owned subsidiaries of the company).

The combination would create one of the world's largest pure-play publicly traded producers of metallurgical coal with geographically diversified assets in Canada, the U.S. and the United Kingdom and with strong market positions in Asia, South America, North America and Europe. The combined company would have synergistic technical expertise in both open-pit and underground coal mining. The combined company's market capitalization and enhanced financial strength would position it well to execute on strategic growth plans.

Western expects to produce 6.1 million tonnes of coal for the fiscal year ending March 31, 2011, growing to 10 million tonnes for fiscal 2013. Walter, based in Tampa, Fla., has stated that it expects to produce 6.6 million tonnes of coal in the calendar year 2010, growing to 8.6 million tonnes in the calendar year 2012. The vast majority of production for both companies is metallurgical coal.

Due-diligence period

Walter's proposal is subject to due diligence and negotiation of definitive agreements. During the due-diligence period, Western has agreed to work exclusively with Walter for a period of up to 14 days expiring Dec. 1, 2010. If a definitive agreement is not reached, no penalties will be incurred by either party. The combination would be subject to approval by shareholders of Western and regulatory authorities.

Walter's proposal is not binding on either party, except with respect to the exclusivity obligations. Western cautions that no definitive agreement has been entered into and accordingly no assurance can be given that the negotiations between Western and Walter will lead to a transaction that is consistent with Walter's proposal or to any transaction at all.

Western does not intend to make any further announcements or communications regarding this potential transaction until either a definitive agreement has been reached or discussions are terminated without such an agreement being reached.

Western has retained RBC Capital Markets as its financial adviser, Goodmans LLP as its Canadian legal adviser and Paul, Weiss, Rifkind, Wharton & Garrison LLP as its U.S. legal adviser. Western's U.K. advisers are Trowers & Hamlins LLP (legal) and Cenkos Securities PLC (nominated adviser).

Western has established a committee of its independent directors to consider the Walter proposal. Deloitte & Touche LLP is acting as independent financial adviser to the special committee.

Walter's agreement with Audley

Western also announced that it was informed today by its largest shareholder, Audley European Opportunities Master Fund Ltd., that Audley has signed an agreement to sell approximately 54.5 million common shares of Western (representing approximately 19.8 per cent of Western's 276.1 million basic common shares outstanding, excluding common shares held by wholly owned subsidiaries of the company) to Walter at a price of $11.50 per share, or total consideration of approximately $630-million, subject to adjustment in certain circumstances. Western is not a party to the share purchase agreement.

Under the share purchase agreement, the Western shares would be sold in two instalments. Upon the satisfaction of certain closing conditions, Walter would acquire approximately 25.3 million common shares for cash, with the balance to be acquired for cash or Walter stock immediately upon the combination of Western and Walter or, in any event, no later than April 30, 2011. The sale by Audley to Walter of 54.5 million common shares of Western is subject to the expiration or termination of the applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act and compliance with any other applicable competition laws.

Western has been advised that a copy of the share purchase agreement will be filed by Audley on SEDAR and by Walter on EDGAR.

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