Alpha completes coal merger; Massey cited again

Jun1, 2011 6:01pm GMT

* Shareholders of both companies approve deal
* Massey cited for more safety violations
* Alpha, Massey stocks slip

By Steve James

NEW YORK, June 1 (Reuters) - Coal miner Alpha Natural Resources (ANR.N: Quote) completed its acquisition of rival Massey Energy (MEE.N: Quote) on Wednesday, even as Massey was cited for more safety violations at one of its mines.

Shareholders of both companies approved the $7 billion buyout that creates the second-largest U.S. coal miner by market value and the largest U.S. supplier of metallurgical coal, which is used in steelmaking.

The combined company has the second-largest coal reserve base in the United States. with about 5 billion tons in the major coal basins of Central and Northern Appalachia, the Illinois Basin and the Powder River Basin of Wyoming.

Alpha's assets now include about 150 coal mines and 40 preparation plants and pro-forma revenues of $6.9 billion in 2010.

"Alpha is now a global industry leader," said Chief Executive Officer Kevin Crutchfield. "This combination significantly enhances Alpha's industry position through the inclusion of complementary mining assets and a combined workforce that is 14,000 people strong."

But he also alluded to Massey's poor safety record that ultimately led to the transaction following an accident at Massey's Upper Big Branch mine in West Virginia last year that killed 29 miners and sent the company's stock tumbling.

"We will immediately begin building upon our history of successful integrations, including implementing Alpha's unique employee-driven 'Running Right' philosophy of safety and environmental stewardship," Crutchfield said.

Alpha has said that as part of the deal it would assume liabilities resulting from pending litigation over the Upper Big Branch disaster, the worst in U.S. mining in four decades.

A federal inquiry into the accident is continuing, but an independent probe recently blamed the disaster on safety failings by Massey.

Announcement of the Alpha-Massey deal came as the federal Mine Safety and Health Administration (MSHA) released April mine inspection data and one of Massey's mines featured prominently.

MSHA said federal inspectors issued 20 orders and five citations at Massey's Randolph Mine in Boone County, West Virginia. Eleven of the orders were for serious violations of a ventilation plan that presented a potential risk of fire, explosion and black lung disease, the agency said.

Since the April 2010 Upper Big Branch accident, MSHA has conducted 259 so-called impact inspections at U.S. mines. The inspections have resulted in a total of 4,610 citations and 442 orders.

Massey and Alpha shareholders both approved the deal at separate meetings. Alpha shareholders also voted to increase the company's float to fund the deal. On Tuesday both companies cleared several legal hurdles.

Shares of Alpha Natural were down 54 cents at $54.25 and Massey's stock was off 38 cents at $65.62 in afternoon trading on the New York Stock Exchange.

(Reporting by Steve James and Ernest Scheyder; Editing by Gerald E. McCormick, Tim Dobbyn, Dave Zimmerman, sourced Thomson Reuters)