Merger Plan Will Create One of America’s Largest Coal Producers

Merger Plan Will Create One of America‘s Largest Coal Producers

ABINGDON, VA – Alpha Natural Resources, Inc. and Foundation Coal Holdings, Inc. reported that they have signed a definitive agreement under which the two companies will merge in an all-stock transaction, creating one of America‘s largest coal producers.

The combined company will be the third-largest coal producer in the U.S., with 2008 pro forma revenues of $4.2 billion. Alpha and Foundation together operate 59 coal mines and 14 preparation plants and in combination will have one of the most expansive geographic footprints in the industry, reserves of more than 2.3 billion tons of coal, and an attractive growth profile. The combined company’s scale of operations, diverse revenue stream, free cash flow generation capability and management depth will provide a platform to compete successfully in today’s market environment and capitalize on the projected future growth in coal demand.

Alpha is an Eastern coal producer and the nation’s largest supplier of metallurgical coal to the steel industry, operating 50 mines and 10 coal preparation plants in four states. Foundation is a diversified producer of thermal coal used by electric utilities, with 9 active mines, 4 preparation plants and coal reserves in Northern Appalachia, the Powder River Basin and Central Appalachia as well as reserves in the Illinois Basin.

"We’re creating a true U.S. leader in the energy sector with balance, size and scale," said Michael Quillen, chairman and CEO of Alpha. "Combining our resources and experience puts us in an excellent position to compete in both domestic and international coal markets, using a diverse array of production sources and marketing channels.

Kevin Crutchfield, Alpha’s president, said, "It’s particularly gratifying to execute on our previously stated intention to pursue transformational growth opportunities. I could not be more pleased with our merger partner, and I look forward not only to bringing our two organizations together through a seamless integration process, but also to pursuing additional growth opportunities."

Alpha is a supplier of high-quality Appalachian coal to the steel industry, electric utilities and other industries. Approximately 88 percent of the company’s reserve base is high Btu coal and 83 percent is low sulfur, qualities that are valued by electric utilities that use steam coal. Alpha is also the nation’s largest supplier and exporter of metallurgical coal, a key ingredient in steel manufacturing. Alpha and its subsidiaries employ more than 3,600 people.

Foundation Coal Holdings, Inc., through its affiliates, is a major U.S. coal producer operating mines and associated processing and loading facilities in Pennsylvania, West Virginia, and Wyoming. Through its subsidiaries Foundation Coal employs approximately 3,000 people and produces approximately 70 million tons of coal annually, largely for utilities generating electricity.

The company’s address is One Alpha Place, P.O. Box 2345, Abingdon, VA 24212, 276.619.4410.