Alpha CEO promises 'great things' (Video)
JULIAN, W.Va. -- Hours after Massey Energy and Alpha Natural Resources shareholders approved the $8.5 billion deal for Alpha to acquire Massey, Alpha CEO Kevin Crutchfield said his company was committed to "running right."
"We'll be doing great things for safety, the environment and the communities where we operate," Crutchfield said in a prepared statement at Massey's regional headquarters in Boone County.
Crutchfield, Senate president and Acting Gov. Earl Ray Tomblin, and a slew of state and local officials attended the unveiling of an Alpha sign outside the building on Wednesday. The name of the road leading up to the building was changed from Morgan Massey Drive -- for the longtime Massey president -- to Running Right Way, in honor of Alpha's safety program.
Later, Crutchfield offered a more concrete example of how Alpha would distance itself from Massey, saying that Massey vice president of operations Chris Adkins would not be continuing with Alpha after the merger.
Alpha spokesman Ted Pile confirmed that announcement, initially reported by National Public Radio. Crutchfield told NPR, "Chris [Adkins] will not be joining Alpha. I'm not going to say anything more about it."
The independent investigation into the Upper Big Branch Mine Disaster led by longtime mine safety advocate Davitt McAteer, had criticized Alpha's plan to place Adkins as co-director of Running Right after the acquisition.
According to McAteer's report, Crutchfield said he "Can't think of two better individuals to lead this effort," of Adkins and the Alpha executive who was to share the responsibility of Running Right with him.
Other Massey officials, including Shane Harvey, Chris Blanchard and Jason Whitehead, have been previously announced to be joining Alpha. All three were also involved with Upper Big Branch.
When asked if he had any concerns about Alpha putting Massey officials who were in charge of Upper Big Branch into positions of authority, Tomblin said, "I think that is one of those things that Alpha will have to determine if the people are doing the jobs they are supposed to be doing."
"We're all very excited that Alpha Natural Resources is once again re-establishing itself as a domestic industry leader right here in West Virginia," Tomblin said at the press conference. "I know that Alpha understands our obligation to take care of the men and women who work every day to provide energy mining coal for us."
More than 10 state and local officials attended the ceremony, including Sen. Ron Stollings, D-Boone, Sen. Corey Palumbo, D-Kanawha, Keith White, D-Mingo, and Kanawha County Commissioner Dave Hardy, who has represented Massey in court.
"We do have a lot of officials here and I think it shows the support, not only at the state level but at the county level, what we feel about coal mining and coal miners' jobs in Southern West Virginia," Tomblin said.
"We are absolutely committed to Running Right. In all aspects of our business it's the right thing to do by our employees, our business and the communities where we operate. It's also good for all of our stakeholders. Together we will set and achieve high standards for safety and the environment," Crutchfield said. "And we are going to involve everyone in this process. Everyone is going to have a voice."
After the ceremony Crutchfield avoided questions from local reporters, walking directly into the building with the politicians and leaving reporters outside.
When asked why he wouldn't answer questions, a spokesman said, "He doesn't have time." But Crutchfield gave several interviews to the national media, including NPR and The Wall Street Journal.
The Massey deal gives Alpha the second largest private coal reserve in America, with about 5 billion tons. The company will become one of the top suppliers of steel-making coal in the world.
Combined with Massey, Alpha will operate about 150 coal mines and 40 preparation plants, more than any other U.S. coal company. The company would employ 14,000 people, including about 7,000 in West Virginia.
Last year, Alpha produced about 82 million tons of coal, with more than half of it coming from the company's two huge surface mines in Wyoming. Massey produced about 37 million tons of coal in 2010, with two-thirds of that being mined in West Virginia.
Under the terms of the agreement, Massey stockholders will receive 1.025 shares of Alpha stock and $10 in cash for each share of Massey stock. Alpha will own 54 percent of the combined company and Massey will own 46 percent.
Alpha's successful bid valued Massey stock at $69.33 a share, or more than 20 percent over Massey's closing price the day before the deal was announced in late January.
The transaction has a total value of about $8.5 billion, with Alpha paying $7.1 billion in cash and stock and also assuming about $1.4 billion in debt, company officials have said.
The shareholder meetings were held just one day after courts in West Virginia and Delaware declined requests from some ownership groups to block the sale over allegations the deal undervalues Massey and was pushed through by Massey management to insulate themselves from liability for the Upper Big Branch Mine Disaster.
"Admittedly, there is a basis to conclude that the Massey board perceived that the company's ability to prosper independently was impaired by its questionable reputation for worker and environmental safety, and that the best way to secure value was to sell the company at a premium to an industry rival with a better reputation in those areas," Vice Chancellor Leo Strine Jr., a judge in Delaware's business court, wrote in a 79-page ruling issued Tuesday. "But the record does not suggest that it is likely that the merger was inspired solely, or even in any material way, by a desire of the Massey directors ... to insulate themselves from liability."
One study, by an analyst working for families of the miners who died at Upper Big Branch, said that Massey insiders -- including now-retired CEO Don Blankenship -- would pocket $196 million in payouts and other committed benefits if the transaction is approved.
While Alpha has avoided a huge disaster like Upper Big Branch, the company narrowly avoided such an incident in May 2009, when seven workers were trapped underground for more than 24 hours by a mine flood in Mingo County. Federal regulators cited the company for improper maintenance of outside drainage systems that allowed heavy rain to inundate the underground tunnels.
And in January 2007, Alpha's Brooks Run subsidiary was cited for major safety violations following a roof collapse that killed two workers at an underground mine in McDowell County. More recently, an Alpha contractor admitted lying to federal investigators about training practices at that same operation, the Cucumber Mine. And earlier this year, another man pleaded guilty to lying about having a foreman's license when performing safety examinations at Alpha's Poplar Ridge Mine in Webster County.
Like Massey, Alpha boasts that most of its coal production comes from "union free" operations. But two unionized underground mines in Pennsylvania, purchased in July 2009 from Foundation Coal, are Alpha's largest producers outside of Wyoming's Powder River Basin.
Reach Gary Harki at email@example.com or 304-348-5163.