Arch Said to Seek Buyers for Several U.S. Coal Mines

By Zachary R. Mider, Jeffrey McCracken and Sonja Elmquist - Apr 27, 2012
BLOOMBERG
Arch Coal Inc. (ACI), the fourth-largest U.S. producer of the fuel, is seeking buyers for several of its thermal-coal mines in the U.S., which together may fetch $600 million or more, said people with knowledge of the matter.

First-round bids for the mines, located in Kentucky, Illinois and Utah, are expected to come in late May, said one of the people, who declined to be named because the process is private. The mines will probably be sold in separate deals, said this person.

Financial advisers including Deutsche Bank AG were hired in recent weeks by St. Louis-based Arch to help sell the mines, said the people. The mines are attracting interest from private- equity investors as well as U.S. and foreign coal producers, one of the people said.

“If you were able to sell thermal mines for that valuation, it would give a big lift to the whole sector,” said Kuni Chen, an analyst at CRT Capital Group in Stamford, Connecticut. The assets “may be strategic to certain buyers if the reserves are contiguous to their mines.”

Arch is among U.S. coal companies to curtail production this year as some power stations switch to natural gas, which has fallen to its cheapest in a decade. Arch has cut jobs in eastern Kentucky and idled mines and as part of its plan to reduce output by 5 million tons.

Retiring CEO

Steven F. Leer, who’s retiring as chief executive officer today after leading Arch since it formation in 1997, has expanded the company’s international sales. The company paid $3.4 billion for U.S. competitor International Coal Group Inc. in June to boost output of coal used by steelmakers, which is more profitable than thermal coal burned by power stations.

Arch rose 0.6 percent to $9.62 at the close in New York. The shares have slumped 71 percent in the past 12 months. The company, which has a BB- credit rating from Standard & Poor’s, was placed on CreditWatch with negative implications by S&P yesterday.

Arch operates 24 mining complexes in eight states, according to its website. Kim Link, a spokeswoman for Arch, declined to comment in an e-mail. A spokesman for Deutsche Bank declined to comment.

The three largest U.S. coal producers ranked by revenue are Peabody Energy Corp. (BTU), Alpha Natural Resources Inc. (ANR) and Consol Energy Inc. (CNX)