May 1, 2018 3 min read

Contura Energy Inc., which operates the Cumberland Mine in Greene County, is merging with the company from which it was created to form what it claims will be the largest metallurgical coal supplier in the United States.

Contura and Alpha Natural Resources Holdings Inc. announced Monday the companies entered into a definitive merger agreement. The transaction is expected to close in the third quarter, subject to Alpha shareholder approval and the satisfaction of other customary conditions.

The combined entity will retain the Contura Energy name and list its common stock on the New York Stock Exchange. It will led by Contura’s existing management team, with Kevin Crutchfield continuing as chief executive officer.

Crutchfield said in a statement: “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.”

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

Contura was created as part of the bankruptcy reorganization of Alpha Natural Resources. Formed by Alpha’s former first lien lenders, Contura launched in July 2016 with the acquisition of certain coal assets from Alpha, including Alpha’s Cumberland Mine near Kirby.

The merger will have no impact on Cumberland Mine operations, the company said. The mine employs about 750 employees, about 600 of whom are represented by United Mine Workers.

Since its inception, Contura has taken a number of actions to strengthen its balance sheet, including refinancing its debt, growing its trading and logistics platform and divesting its two Powder River Basin thermal mines in December 2017, the company said.

Since bankruptcy, Alpha, too, has taken steps to both streamline its capital structure and divest certain higher-cost, active and idle operations through targeted asset divestments.

“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,” Contura board chairman Neale Trangucci said.

Post-merger, the companies said, Contura’s assets will primarily consist of a diversified production profile of high-quality, metallurgical and thermal coal mines in Central Appalachia, a highly efficient longwall thermal coal mine in Northern Appalachia, one of the largest met coal reserves in the United States and leading export capacity through a 65 percent ownership in the Dominion Terminal Associates coal export facility in Newport News, Va.

Under 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.