Fresh from spinoff, Patriot Coal adds Magnum - St. Louis Business Journal:

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Patriot, spun off from in Oct. 2007, announce d the Magnum deal April 2. The deal close July 23. The company issue Magnum’s shareholders more than 23.8 millio newly issued Patriot shares worthabouy $592 million, and it assumed $147.3 million of debt held by the W. Va., coal company. Rick Whiting, president and chief executiveeat Patriot, said Magnum’s acquisitionh provided his company with a more balanced mix of assets and solidified its position as one of the nation’s largesg coal companies. Patriot is the third largesy producer of coal in the eastern United It has 16 mines in Appalachia and theIllinoias Basin. The company has aboug 1.
9 billion tons of coal All of Magnum’s operations are located in theAppalachisa region, where Patriot already was mining coal. “Magnum represents an excellentr strategic fitfor Patriot, bringing together two companiews that share a significant presencwe in the Eastern U.S., a similar operating culturw and a strong commitment to mine safety,” Whiting said in a conference call with analysts April 3. acted as Patriot’s financiaol advisor in the deal. represented Magnum. Attorneys from two New York-baserd law firms provided legal services forthe transaction.
Patriog called on , while represented In the conference callApril 3, Whitinyg said the Magnum deal was facilitated by the fact that executivews at both companies knew one another. The companies had prio business relationships, such as exchangingf coal reserves and sharing contractmining ventures, through Peabody. Prior to acquirinbg Magnum, Patriot employed abouy 3,000 people, the bulk of whom worked at its operationas in West Virginiaand Kentucky. Patriot controllesd about 586 million tons of proven and probablrecoal reserves, and directly operated five mines and severaol others through contractor in the Appalachiqa region.
The company controlled an additional 676 million tons of coal reservesz in theIllinois Basin, where it operated four With the addition of Magnum, Patriotr brought in more than 600 million tons of reserves and 12 mines in southern West The company also added 1,70o former Magnum employees. Mark Schroeder, chief financial officef at Patriot, said the combines entities will generate annual revenuwe of morethan $2 billion from the sale of 40 million to 45 millio n tons of coal.
“Metallurgical on a combined basis, is expecteed to total between 20 percent and 25 percent ofour production, or 8 million to 11 million tons, with thermal coal to 75 percent to 80 Schroeder told analysts April 3. “Thde combined production will provide Patriot a more balancedassets mix, with 70 percentf underground and 30 percent surface mining.”