In an 8-K filing announcing a material definitive agreement, Virginia-based Alpha said that, on February 19, the United States District Court for the Southern District of West Virginia entered an order preliminarily approving a proposed settlement of the purported securities class action brought by Massey Energy Company stockholders in the wake of the April 2010 explosion at Massey’s Upper Big Branch mine.
As previously disclosed, in October and December 2013, the parties participated in mediation and, in December 2013, the parties reached agreement on all material terms of settlement, including a cash payment of $265 million.
Earlier this month on February 5, the parties reached agreement on definitive settlement documentation, subject to court approval, and the lead plaintiffs moved the court for preliminary approval of the settlement.
On February 19, the court entered an order preliminarily approving the settlement, subject to a final determination following a settlement hearing scheduled to be held on June 4, 2014.
Pending final determination, the plaintiffs may not further prosecute the action. If the court approves the settlement, it would result in the dismissal of the action.
Whether the court will approve the settlement remains uncertain.
Under the terms of the stipulation and agreement of settlement by and among Alpha Natural Resources, Alpha Appalachia Holdings (formerly known as Massey Energy Company), various Massey officers and directors named as defendants, and the lead plaintiff, the Commonwealth of Massachusetts Pension Reserves Investment Trust, and the named plaintiff, David Wagner, on behalf of themselves and the plaintiff class, the company has agreed to make a cash payment of $265 million in settlement of all claims.
The company is required to fund $30 million of that amount into an escrow account no later than five business days after the date of the preliminary approval order. The company is required to fund the remaining $235 million into an escrow account no later than one business day prior to the date of the final settlement hearing.
The settlement agreement contains no admission of wrongdoing by any of the defendants.
The company expects insurance recoveries of approximately $70 million to help cover the cost of the settlement.