Alpha Natural sets conversion rates for Massey's 3.25% convertibles

By Jennifer Chiou

New York, June 1 - Alpha Natural Resources, Inc. is now a guarantor under Massey Energy Co.'s 3.25% convertible senior notes due 2015 following the completion of Alpha's acquisition of Massey, according to an 8-K filing with the Securities and Exchange Commission. The company also announced new conversion rates.

The companies entered into a supplemental indenture for the notes with Wilmington Trust Co. as trustee.

As a result of the merger, which was announced on May 2, the notes remain convertible through at least July 2 and no later than Aug. 3.

In addition, Alpha stated that a previously deferred adjustment will be applied to the conversion rate for the securities, resulting in a rate of 11.456 shares per $1,000 principal amount.

The filing noted that holders who convert their notes from the effective time of the merger through a period ending no sooner than July 21 and no later than July 29 will be entitled to receive an increased conversion rate, including a make-whole premium, of 16.2349.

Now that the merger has been executed, the consideration deliverable upon conversion of a Massey convertible will be linked to the reference property that has replaced the Massey shares: 1.025 Alpha shares plus $10.00 per share of Massey stock.

As a result of the changes, the 8-K stated that the consideration delivered upon any conversion of $1,000 principal amount of Massey convertibles will be calculated using 16.6408 shares of Alpha common stock and $162.35, taking into account the make-whole premium. This drops to 11.7424 shares of Alpha stock and $114.56 without the make-whole premium.

Holders also have the right to put back their convertibles to Massey at par plus accrued interest no later than June 29 through a period ending no sooner than June 21 and no later than Aug. 3.

Richmond, Va.-based Massey (NYSE:MEE; $65.14 at close June 1) and Abingdon, Va.-based Alpha Natural Resources (NYSE:ANR; $53.40 at close June 1) are coal companies.

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