Contura Energy Inc., along with ANR Inc. and Alpha Natural Resources Holdings Inc. announced that the companies have entered into a definitive merger agreement providing for an all-stock transaction to create what could potentially be the largest coal supplier company in the U.S. The transaction was unanimously approved by the boards of directors of all parties and is expected to close in the third quarter of 2018.

Under the terms of the agreement, Alpha shareholders will receive 0.4071 Contura common shares for each ANR Inc. Class C-1 share and each Alpha Natural Resources Holdings Inc. common share they own, representing approximately 46.5% ownership in the merged entity. Contura is also expected to file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission and list its common stock on the New York Stock Exchange. Contura shares currently trade on the OTC Market.

The resulting combination is expected to enhance competitive positioning and generate meaningful cost synergies in the range of $30 million to $50 million annually, including through coal blending optimization as well as purchasing, operating, administrative, and capital allocation efficiencies, the announcement said.

The combined entity will retain the Contura Energy name and be led by Contura’s existing management team, with Kevin Crutchfield continuing as chief executive officer. Alpha’s chairman and chief executive officer, David Stetson, will resign his role and transition to the Contura board. Immediately after closing, the Contura board will be composed of the five existing Contura directors as well as the following four individuals who currently serve on Alpha’s board: David Stetson, Daniel Geiger, John Lushefski and Harvey Tepner.

“While this transaction would probably not have been possible even a year ago, resurgent global coal markets, a tightened production profile by way of recent asset divestments made independently by both Alpha and Contura, and resulting potential cost synergies together provide an exciting opportunity for value creation through combining our respective operational portfolios,” said Crutchfield. “The Contura team is excited to join forces with Alpha’s set of highly competitive coal operations and unify some of the best coal miners in the world under one organization.”

“We believe this transaction makes great strategic sense that benefits our long-term stakeholders,” added Stetson. “The combined organization will have a stronger balance sheet, greater capabilities and a longer reserve life. More importantly, the merger will align two companies that share a steadfast commitment to safety and Running Right.”

Contura launched in July 2016 with an initial acquisition of certain coal assets from Alpha Natural Resources Inc., concurrent with Alpha’s emergence from its Chapter 11 reorganization process. Contura and Alpha have since operated independently.
“This transaction will leverage the prior transformative work accomplished by both Contura and Alpha management teams to materially improve each entity’s operational, financial and risk profiles,” said Contura board chairman Neale Trangucci. “Achieving such a turnaround in less than 2 years is no small task. Our board is proud of and appreciates the diligent work of employees and management of both organizations, and we are very excited about the future of the new combined company.”

Post-merger, Contura’s assets will consist of coal mines in Central Appalachia, longwall thermal coal mine in Northern Appalachia, one of the largest met coal reserves in the U.S., and its 65% ownership interest in the Dominion Terminal Associates coal export facility located in Newport News, Virginia.