Exhibit 99.2
FOR IMMEDIATE RELEASE
December 3, 2010
WALTER ENERGY AND WESTERN COAL
AGREE TO CAD$3.3 BILLION MERGER
Transaction Creates the Leading, Publicly
Traded, “Pure-Play” Metallurgical Coal Producer
Globally; Combined Company will have Unique Access to Pacific and
Atlantic Seaborne Markets
Agreement Based on Walter’s Previously
Disclosed Merger Proposal which Valued Western Coal at a 56 Percent
Premium to its Pre-Announcement Price
Transaction Expected to be Accretive to Walter
Energy on an Earnings Per Share Basis in the First Full Year After
Closing
(TAMPA, Fla. and Vancouver, B.C.)
— Walter Energy (NYSE: WLT) and Western Coal Corp. (TSX: WTN,
WTN.WT and AIM: WTN) announced today that they have entered into an
arrangement agreement (the “Agreement”) for Walter
Energy to acquire all of the outstanding common shares of Western
Coal for CAD$11.50 per share in cash or 0.114 of a Walter Energy
share, or for a combination thereof, all subject to proration. The
transaction represents a total enterprise value of CAD$3.3 billion
(USD$3.3 billion), net of cash on the balance sheet for Western
Coal. The Agreement follows announcements on Nov. 18, 2010 by
Walter Energy and Western Coal that they had begun exclusive
negotiations regarding the potential business
combination.
The transaction will create the
world’s leading, publicly traded, “pure-play”
metallurgical coal producer with total coal reserves of
approximately 385 million tons(i) and a significant and growing
production profile balanced between Walter Energy’s current
high productivity assets and Western Coal’s high growth
assets in Canada, the United States and the United Kingdom. The
combined company expects to produce in excess of 20 million tons of
coal by 2012. It will also be the only producer with cost
advantaged transportation access to the high growth Asian and South
American seaborne metallurgical coal markets.
“This is a transformative
transaction at a time when global demand for metallurgical coal is
surging,” said Joe Leonard, interim chief executive officer
of Walter Energy. “Western Coal has an attractive
high-quality metallurgical coal asset base and has embarked on an
organic growth strategy that is expected to increase production
more than 60 percent by fiscal 2013. It is a unique strategic fit
with Walter Energy’s large scale, high-productivity mines
which produce premium-quality metallurgical coal for customers in
South America and Europe. Our combined production capacity and
geographic footprint leaves us extremely well positioned to benefit
from favorable sector dynamics driven by increased steel production
in markets such as China, India and Brazil. Bottom line, this is
the right transaction at the right time.”
The transaction is expected to be
accretive to Walter Energy’s earnings per share in the first
full year following the close of the transaction, with continued
strong operating cash flows derived from existing production assets
and high return on investment capital expected from development
projects.
Keith Calder, president and chief
executive officer of Western Coal, said, “We are pleased to
be combining with Walter Energy and believe this transaction offers
Western Coal’s shareholders immediate value as well as future
upside from their ownership of approximately 14 percent of the
combined company. The combined business will have substantial
reserves and an experienced management team focused on safety,
growth and shareholder value. With its size and financial strength,
the combined business will have future growth opportunities that
neither one of us would have on our own.”
The agreed price of CAD$11.50
represented a 56 percent premium to Western Coal’s closing
share price of CAD$7.38 on Nov. 17, 2010, the day before Walter
Energy announced it had submitted a proposal to Western
Coal.
Mr. Leonard concluded, “We see
tremendous opportunity for the stakeholders of both companies and
we will work closely with the Canadian national and provincial
authorities to give careful attention to any sensitivities, provide
detail on the potential of the combined company and to describe the
broad benefits of this combination.”
Transaction
Details
The transaction will be effected by
way of a statutory plan of arrangement pursuant to the Business
Corporations Act (British Columbia). Under the terms of the
agreement, Western Coal shareholders will be permitted to exchange
each of their Western Coal shares for, at their election, CAD$11.50
in cash or 0.114 of a Walter Energy share (the “merger
consideration”), or for some combination thereof. All
elections will be subject to proration if total cash elections
exceed 70 percent of the total merger consideration to be paid or
total share elections exceed 30 percent of the total merger
consideration.
The total amount of cash to be paid
to Western Coal shareholders under the transaction is expected to
be approximately CAD$2.1 billion (USD$2.1 billion) and the total
number of shares of Walter Energy shares to be issued to Western
Coal shareholders under the transaction is expected to be
approximately 9 million. These amounts assume that 278.1 million
Western Coal shares participate in the arrangement, being a fully
diluted amount of 290.9 million shares, less the 25.3 million
shares acquired under the first closing of Walter Energy’s
share purchase agreement announced on Nov. 18, 2010. This
further assumes that the second closing under the share purchase
agreement for a further purchase of 29.3 million Western Coal
shares is completed for the merger consideration. Should this
second purchase occur under a separate applicable cash option it
would not affect the merger consideration for remaining
shareholders of Western Coal. The exchange ratio to determine the
number of shares to be issued to Western Coal shareholders was
based on a Walter Energy share price of USD$99.35, which is equal
to the 20-day volume weighted average closing price as of Dec. 1,
2010. Walter Energy has fully committed financing for the cash
portion of the consideration.
Following the completion of the
transaction, Walter Energy will maintain its primary listing on the
New York Stock Exchange under the symbol WLT. In connection with
the transaction, Walter Energy will also apply for a listing on the
Toronto Stock Exchange. Upon completion of the transaction,
three directors nominated by the Western Coal board of directors
will be added to the Walter Energy board of directors. The senior
management team, including the CEO, will be announced prior to the
transaction’s closing.
The Agreement has been unanimously
approved by both companies’ boards of directors and is
expected to be completed by the second quarter of 2011.
An independent committee of Western
Coal’s board of directors, as part of the process and in
accordance with applicable regulatory requirements, received a
formal valuation of the Western Coal shares from National Bank
Financial. In addition, National Bank Financial ha
