Private Equity Consortium Consisting of First Reserve, Blackstone and AMCI Agrees to Acquire Leading U.S. Coal Producer

May 25, 2004, 00:00 AM by User Not Found
New York, May 25, 2004 – A private equity consortium consisting of First Reserve Corporation, The Blackstone Group, and American Metals & Coal International (AMCI) has entered into a definitive agreement to buy RAG American Coal Holding, Inc. from RAG Coal International for a purchase price of approximately $1 billion.

New York, May 25, 2004 – A private equity consortium consisting of First Reserve Corporation, The Blackstone Group, and American Metals & Coal International (AMCI) has entered into a definitive agreement to buy RAG American Coal Holding, Inc. from RAG Coal International for a purchase price of approximately $1 billion.

RAG American Coal is the fourth largest coal producer in the United States based on tonnage, with annual production of approximately 65 million tons from a geographically diversified group of mines located throughout the Powder River Basin, Pittsburgh Seam, Central Appalachia and Illinois Basin regions. The transaction is anticipated to close in the third quarter of 2004.

James Roberts, CEO of RAG American Coal, said: “I am very excited for the company as it enters this next stage in its development, and I look forward to working closely with our new partners in order to further grow the company.”

Stephen A. Schwarzman, President and CEO of The Blackstone Group, commented: “We are delighted to have the opportunity to invest in this attractive, sizeable portfolio of coal mines as part of our continuing focus on making high-quality investments in the global energy sector. This investment is an affirmation of our belief in the strong fundamentals of the domestic coal industry, and our confidence in RAG American Coal’s strong management team.”

William E. Macaulay, Chairman and CEO of First Reserve, said: "As the largest private equity investor in the energy sector, First Reserve remains enthusiastic about the future of the domestic coal industry and has been impressed with RAG American Coal's balanced set of assets, track record of profitability and superior management team. We look forward to working with the management team to continue to strengthen RAG American Coal's already impressive position as the fourth largest coal producer in the United States."

This transaction, combined with the recently completed sale of coal mining operations in Australia and Colorado and the forthcoming sale of the Venezuelan assets to Peabody Energy, will represent the completion of RAG Coal International’s previously announced intentions to sell all of its foreign mining operations and focus on its market leading mining equipment and coal trading activities.

Juergen W. Stadelhofer, CEO of RAG Coal International, commented: “RAG is pleased to conclude the divestiture of its international mining operations in this transaction with Blackstone and First Reserve. The interest of these two premier private equity investment firms in acquiring RAG American Coal is evidence of the high quality portfolio of coal mining operations that RAG has assembled over the last several years.”

The Blackstone Group (www.blackstone.com), a leading global investment firm, has raised over $14 billion for private equity investing across a number of industries, including investments in the energy industry. Blackstone Capital Partners IV is the largest institutional private equity fund ever raised at $6.45 billion. Blackstone is headquartered in New York and is advised on its European investments by offices in London and Hamburg. The Hamburg office advises on fund investments in the German speaking and Northern European markets.

First Reserve Corporation (www.firstreserve.com), based in Greenwich, CT, is the largest and oldest private equity firm specializing in the energy industry with $4.7 billion under management across four active funds. Throughout its 20-year history, First Reserve has developed a strong franchise of investing exclusively in the energy industry, utilizing its broad base of specialized industry knowledge. First Reserve has funded more than 80 principal transactions and completed more than 200 add-on acquisitions with its core companies.

American Metals and Coal International, Inc. (AMCI) is a privately-owned international coal mining and marketing company, headquartered in Greenwich, Connecticut, and operates out of a number of offices worldwide. Founded in 1986, AMCI has grown to become one of the largest privately-owned international coal companies. Recently, AMCI has focused on acquiring coal mining interests in the United States and on obtaining and developing virgin coal reserves and operating new coal mines in Australia.