Digital Assets Report

Newsletter

Like this article?

Sign up to our free newsletter

Duquesne to vote against merger of Alpha Natural Resources

Related Topics

Duquesne Capital Management, the largest shareholder of Alpha Natural Resources, has decided to vote against the proposed merger with Foundation Coal Holdings because it believes it is

Duquesne Capital Management, the largest shareholder of Alpha Natural Resources, has decided to vote against the proposed merger with Foundation Coal Holdings because it believes it is against the best long term interests of ANR shareholders.

Duquesne is the beneficial owner of 5.9 million shares, which represents more than 8.3 per cent of the outstanding common stock. The merger transaction is scheduled to be voted on by ANR shareholders on 31 July 2009.

Duquesne’s decision to vote against the merger was made after two months of detailed financial analysis and discussions with members of the senior management teams of both ANR and FCL in order to evaluate the impact of the proposed merger on ANR and its shareholders.

The analysis leads Duquesne to the conclusion that the proposed transaction is financially dilutive to ANR shareholders by USD10-USD15 per share, increases balance sheet risk to ANR via the assumption of FCL’s USD650m OPEB/pension liability and USD530m in net financial debt, and reduces financial flexibility via the highly restrictive covenants in FCL bonds.

In addition to this financial dilution and these balance sheet risks, in Duquesne’s view the transaction is grossly dilutive to ANR’s favourable business posture – its exposure to the international metallurgical and thermal coal markets, and its favourable employee profile. Duquesne sees no advantages to the transaction that can make up for these detriments.

Like this article? Sign up to our free newsletter

Most Popular

Further Reading

Featured