WTN West. Coal

 

TIDMWTN 
 
RNS Number : 4036W 
Western Coal Corporation 
18 November 2010 
 

 
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|                                                 |     1000 - 885 Dunsmuir | 
|                                                 |                  Street | 
|                                                 |     Vancouver, B.C. V6C | 
|                                                 |                     1N5 | 
|                                                 |                   Phone | 
|                                                 |            604-608-2692 | 
|                                                 |   info@westerncoal.com  | 
|                                                 |    www.westerncoal.com  | 
|                                                 |                         | 
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News ReleaseWTN 10-28 
 
     Western Coal Enters Into Exclusive Negotiations For Potential Business 
                        Combination With Walter Energy 
            Western Also Announces Sale of Shares by Audley to Walter 
Vancouver, BC, November 18, 2010 - Western Coal Corp. (TSX: WTN, WTN.WT and AIM: 
WTN) (the "Company" or "Western") announced today that it has entered into an 
exclusivity agreement with, and received a proposal regarding a strategic 
business combination (the "Combination") from Walter Energy, Inc. (NYSE: WLT) 
("Walter"), a leading US 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% 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 US and the UK 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, FL, 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 December 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 advisor, Goodmans LLP 
as its Canadian legal advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP 
as its US legal advisor. Western's UK advisors are Trowers & Hamlins LLP (legal) 
and Cenkos Securities plc (Nominated Advisor). 
Western has established a committee of its independent directors to consider the 
Walter proposal. Deloitte & Touche LLP is acting as independent financial 
advisor 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 Limited ("Audley"), that Audley has 
signed an agreement to sell approximately 54.5 million common shares of Western 
(representing approximately 19.8% 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 US 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 (www.sedar.com) and by Walter on EDGAR (www.sec.gov). 
About Western Coal 
Western Coal is a producer of high quality metallurgical coal from three mines 
in northeast British Columbia (Canada), high quality metallurgical coal and 
compliant thermal coal from four mines located in West Virginia (USA), and high 
quality anthracite and metallurgical coal in South Wales (UK). Other interests 
owned include a 24% interest in Mandalay Resources Corporation (MND: TSX), 40% 
interest in Xtract Energy (XTR: AIM), and a 20% interest in NEMI Northern Energy 
& Mining (NNE.A: TSX). The Company is headquartered in Vancouver, BC, Canada, 
and trades on the AIM and TSX stock exchanges under the symbol "WTN". More 
information can be found at www.westerncoal.com 
 
Forward-Looking Information 
 
This release may contain forward-looking statements that may involve risks and 
uncertainties. Such statements relate to the Company's expectations, intentions, 
plans and beliefs including, in particular, statements relating to a potential 
strategic business combination between the Company and Walter and the terms of 
any such transaction. These statements are not guarantees of future performance 
and involve risks, uncertainties and assumptions that are difficult to predict. 
Actual outcomes and results may differ materially from what is expressed or 
forecasted in these forward-looking statements as a result of various important 
factors, including, but not limited to: the Company's ability to negotiate a 
potential strategic business combination with Walter; the price, terms and 
conditions of any such transaction; the benefits of any such transaction and its 
impact on the Company's business;, changes in commodity prices; strengths of 
various economies; the effects of competition and pricing pressures; the 
oversupply of, or lack of demand for, the Company's products; currency and 
interest rate fluctuations; various events which could disrupt the Company's 
construction schedule or operations; the Company's ability to obtain additional 
funding on favourable terms, if at all; and the Company's ability to anticipate 
and manage the foregoing factors and risks. Additionally, statements related to 
the quantity or magnitude of coal deposits are deemed to be forward looking 
statements. The reliability of such information is affected by, among other 
things, uncertainties involving geology of coal deposits; uncertainties of 
estimates of their size or composition; uncertainties of projections related to 
costs of production; the possibilities in delays in mining activities; changes 
in plans with respect to exploration, development projects or capital 
expenditures; and various other risks including those related to health, safety 
and environmental matters. Readers are referred to the documents filed by the 
Company on SEDAR. 
 
                                      -30- 
 
For further information: 
 
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| Western Coal Corp.        | Buchanan               | Cenkos           | 
| David Jan                 | Communications         | Securities       | 
| Head of Investor          | Bobby Morse /          | Nominated        | 
| Relations                 | Katharine Sutton       | Advisor and      | 
| +1 604 694 2891           | +44 (0)207 466 5000    | Broker           | 
| David.jan@westerncoal.com | bobbym@buchanan.uk.com | Nick Wells/      | 
|                           |                        | Ivonne Cantu /   | 
|                           |                        | +44 207 397 8900 | 
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This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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