ST. LOUIS, Feb. 26, 2020 /PRNewswire/ -- Emphasizing that
the case for combining assets has only grown stronger in recent
months, Arch Coal (NYSE: ARCH) and Peabody (NYSE: BTU) today
announced that they intend to continue to pursue creation of a
joint venture to strengthen coal's competitiveness with other
energy sources and create substantial value for multiple
stakeholders. The announcement follows a negative split decision by
the U.S. Federal Trade Commission (FTC) that advances the process
to the legal system.
"We view the need for this combination as self-evident," said
John W. Eaves, Arch's chief
executive officer. "The proposed joint venture promises to
enhance the cost-competitiveness of our thermal operations, enable
us to serve the evolving needs of domestic power generators well
into the future, and protect the value of our thermal assets for
our shareholders. In short, it will create a stable, durable
supply platform for our thermal customers even as we continue our
organizational pivot towards global metallurgical markets."
"The proposed joint venture offers a clear and compelling path
to strengthen both our and our customers' ability to compete in
today's marketplace with electricity produced from coal," said
Peabody President and Chief Executive Officer Glenn Kellow. "We have provided tremendous
amounts of evidence to the FTC during an extensive review, fully
demonstrating that coal, including Southern Powder River Basin
coal, faces intense competition from natural gas and other
alternate fuels. We believe that the commission has reached an
incorrect decision that should be rapidly remedied within the court
system to allow customers and others to benefit from the
combination."
Arch and Peabody intend to litigate the FTC's decision within
the U.S. federal court system over the coming months. Both
companies believe the FTC has incorrectly defined the market, and
fails to reflect the true competitive nature of the current U.S.
energy landscape.
The transaction was announced in June
2019 and would combine the companies' Powder River Basin and
Colorado assets. Ownership
of the joint venture would be structured with Peabody owning 66.5
percent and Arch owning 33.5 percent. If consummated, the
joint venture is expected to realize annual synergies of
$120 million over an initial 10-year
period, which would benefit all stakeholders, including customers,
local communities, employees, investors and multiple
others.
The transaction includes seven of the companies' mines,
including Peabody's North Antelope Rochelle Mine (NARM) and Arch's
Black Thunder Mine, which share a property line of more than seven
miles. Additional assets include the Caballo, Rawhide and
Coal Creek mines in Wyoming along with the West Elk and Twentymile
mines in Colorado.
U.S.-based Arch Coal, Inc. is a top coal producer for the global
steel and power generation industries. Arch operates a
streamlined portfolio of large-scale, low-cost mining complexes
that produce high-quality metallurgical coals in Appalachia and
low-emitting thermal coals in the Powder River Basin and other
strategic supply regions. For more information, visit
www.ArchCoal.com.
Peabody is the leading global pure-play coal company and a
member of the Fortune 500, serving power and steel customers in
more than 25 countries on six continents. The company offers
significant scale, high-quality assets, and diversity in geography
and products. Peabody is guided by seven core values: safety,
customer focus, leadership, people, excellence, integrity and
sustainability. For further information, visit
PeabodyEnergy.com.
Forward-Looking Statements: This press release contains
"forward-looking statements" – that is, statements related to
future, not past, events. In this context, forward-looking
statements often address our expected future business and financial
performance, and often contain words such as "should," "appears,"
"expects," "anticipates," "intends," "plans," "believes," "seeks,"
or "will." Forward-looking statements by their nature address
matters that are, to different degrees, uncertain. For us,
particular uncertainties arise from changes in the demand for our
coal by the domestic electric generation and steel industries; from
legislation and regulations relating to the Clean Air Act and other
environmental initiatives; from competition within our industry and
with producers of competing energy sources; from our ability to
successfully acquire or develop coal reserves; from operational,
geological, permit, labor and weather-related factors; from the Tax
Cuts and Jobs Act and other tax reforms; from the effects of
foreign and domestic trade policies, actions or disputes; from
fluctuations in the amount of cash we generate from operations,
which could impact, among other things, our ability to pay
dividends or repurchase shares in accordance with our announced
capital allocation plan; from our ability to successfully integrate
the operations that we acquire; from our ability to complete the
joint venture transaction with Peabody Energy in a timely manner,
including obtaining regulatory approvals and satisfying other
closing conditions; from our ability to achieve expected synergies
from the joint venture; from our ability to successfully integrate
the operations of certain mines in the joint venture; and from
numerous other matters of national, regional and global scale,
including those of a political, economic, business, competitive or
regulatory nature. These uncertainties may cause our actual future
results to be materially different than those expressed in our
forward-looking statements. We do not undertake to update our
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by law. For a
description of some of the risks and uncertainties that may affect
our future results, you should see the risk factors described from
time to time in the reports we file with the Securities and
Exchange Commission.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/arch-and-peabody-announce-intent-to-continue-pursuit-of-highly-synergistic-joint-venture-to-create-value-for-customers-and-shareholders-301011748.html
SOURCE Arch Coal, Inc.