Massey Energy's 3.25% convertibles have higher conversion rate during make-whole period

By Marisa Wong

Madison, Wis., May 12 - Massey Energy Co. delivered a notice to holders of its 3.25% convertible senior notes due 2015 of changes to the conversion rate for notes converted during the make-whole period, according to a news release.

Massey delivered an initial notice on May 2 of conversion triggered by Alpha Natural Resources Inc.'s planned acquisition of Massey. As previously reported, the securities are convertible at the option of holders into an amount up to 100% of the principal amount in cash plus, at the election of Massey during the convertibility period prior to the actual effective date of the merger, an excess amount or, at the election of Alpha Natural, any excess amount on and after the effective date in cash, stock or a combination.

The notes are currently convertible into 11.4542 shares per $1,000 principal amount.

Holders who surrender their convertibles during the make-whole conversion period - which begins on the effective date of the merger, expected to be June 1, and ends on the earlier of 41 business days after the fundamental change repurchase date - will be entitled to receive an increase in the conversion rate for the surrendered notes.

During the make-whole period, the current conversion rate will be increased by a number of additional shares dependent upon the effective date of the merger and the average of the closing prices of Massey stock over the five consecutive trading days immediately preceding the effective date.

If the average closing share price is greater than $199.24 or less than $61.26 per share, the conversion rate will not be increased. The conversion rate will never be increased to an amount greater than 16.3223 shares per $1,000 principal amount.

During the make-whole period, the notes will no longer be convertible into cash and Massey common shares but will be convertible into cash and common stock of Alpha Natural Resources.

Wilmington Trust Co. is the conversion agent.

Richmond, Va.-based Massey and Abingdon, Va.-based Alpha Natural Resources are coal companies.

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