ST. LOUIS, June 28, 2013 /PRNewswire/ -- Arch Coal, Inc. (NYSE:ACI) ("Arch" or "the company") and Bowie Resources, LLC ("Bowie") today announced that they have entered into a definitive agreement under which Arch will sell to Bowie its wholly-owned subsidiary, Canyon Fuel Company, LLC ("Canyon Fuel"), for $435 million in cash, subject to customary adjustments for working capital and other items. Both companies have approved the transaction, which is expected to close in the third quarter of 2013. (Logo: http://photos.prnewswire.com/prnh/20120727/CG47668LOGO) "The sale of our Utah operations is consistent with our previously announced plan to unlock value for our shareholders by divesting certain non-core thermal coal assets," said John W. Eaves, Arch's president and CEO. "As part of our strategy, we have been diligently focused on optimizing our asset base, expanding our coal export network, reducing our discretionary capital spending and re-aligning our portfolio for growth. With this transaction, we're delivering on a number of these initiatives while also enhancing our financial flexibility." Canyon Fuel includes the Sufco and Skyline longwall mines and the Dugout Canyon continuous miner operation, all located in Utah. In addition to these active operations and related support facilities, Bowie will receive approximately 105 million tons of bituminous coal reserves in Utah. After the transaction is completed, Bowie plans to keep the existing 725-person workforce in place at the Canyon Fuel operations. "From the inception of our ownership of Bowie, our goal has been to establish a core business rooted in the Western Bituminous Region and to grow it, not only organically but with synergistic acquisitions," said John J. Siegel, a principal owner of Bowie. "In that context, it would be hard to imagine a more logical next step in our evolution than the purchase of these superior Canyon Fuel mines." Positioning for the Future "The divestiture of Canyon Fuel will streamline Arch's mine portfolio and allow us to focus on the most value-enhancing parts of our business, such as building out and upgrading our Appalachian metallurgical coal platform and optimizing our low-cost thermal coal franchise to serve the domestic and export coal markets," said Eaves. "Our Utah operations have generated more than $600 million in free cash flow for Arch since 1998 and have created significant value for our company. But we believe that monetizing these assets now, before investing meaningful additional capital, is the right course of action for our shareholders." Arch will retain its Mountain Coal Company's West Elk mine in Colorado and approximately 300 million tons of coal reserves in the Western Bituminous Region, including bituminous reserves located in southern Wyoming. In 2012, the West Elk mine sold 6.7 million tons of high-quality, low-sulfur coal, of which roughly 40 percent was shipped into the seaborne thermal market. "West Elk is a valuable, low-cost asset with a broad market reach that includes customers in the eastern and western United States and in the international arena," said Paul A. Lang, Arch's executive vice president and chief operating officer. Enhancing Financial Flexibility "This sale pulls forward multiple years' worth of expected cash flows for Arch, reduces our future capital outlays and further increases our liquidity, all of which greatly enhance our financial flexibility," said Eaves. "Moreover, Arch's ample cash balance positions the company for future debt reduction as coal markets improve."