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TheStreet Open House

Consol To Sell 5 Mines For At Least $850M In Cash

By VICKI SMITH

MORGANTOWN, W.Va. (AP) a¿¿ CONSOL Energy Inc. said Monday it is selling all five of its longwall coal mines in West Virginia to a subsidiary of Ohio-based Murray Energy for a deal that includes $850 million in cash.

Chairman and Chief Executive Officer J. Brett Harvey said the sale of the Consolidation Coal Co. subsidiary was a difficult decision but is good for the company's long-term growth and allows CONSOL to focus more on natural gas exploration and development.

CONSOL is selling the McElroy, Shoemaker, Robinson Run, Loveridge and Blacksville No. 2 mines, which produced a combined 28.5 million tons of thermal coal last year. The transaction also includes river and dock operations with a fleet of 600 barges and 21 towboats.

The deal also gives Murray Energy about 1.1 billion tons of coal reserves.

Murray Energy is taking roughly $2.4 billion in liabilities off CONSOL's balance sheets, Harvey said, including $2.1 billion in post-retirement benefit plans, $105 million in workers' compensation payments, $61 million in contributions to the Coal Workers' Pneumoconiosis or black lung fund, and $13 million in long-term disability costs.

Murray Energy is also absorbing $149 million in environmental costs and is taking on CONSOL's pension obligations with the United Mine Workers of America. Harvey said that agreement requires contributions of about $33 million per year.

UMWA President Cecil Roberts said the sale "changes nothing" for some 2,800 active hourly workers at the five mines.

"Our collective bargaining agreement does not go away with this transaction," he said, "and our members remain covered by its provisions. There will be no changes in pay, benefits, insurance, schedules, working conditions, safety provisions, grievance procedures or any other language in the contract."

Some 23,000 retirees, dependents and surviving spouses are also affected by the sale, which Roberts said is just one of many in the nation's coalfields.

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