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Massey Energy plans capital restructuring to refinance 6.95% notes, convertibles
New York, Nov. 15 - Massey Energy Co. announced a capital restructuring plan designed to take advantage of "anticipated favorable market conditions."
The Richmond, Va., coal miner plans to refinance its remaining 6.95% senior notes due 2007 and make a cash tender offer for its $132 million of 4.75% convertible senior notes due 2023.
In addition, Massey will carry out an exchange to encourage conversion of its $175 million of 2.25% convertible senior notes due 2024.
Through the planned transactions, Massey will remove 6.8 million shares from its diluted earnings per share transaction and "position the company for share repurchases."
Massey also announced its board has authorized a $500 million share buyback program.
Free cash flow is expected to "substantially" increase in the second half of 2006 and the stock repurchases are expected to begin then.
The refinancing is expected to start in the "near future" and announcements will follow on the financing arrangements.
"The board recommended these actions at the conclusion of months of careful evaluation of financing and repurchase alternatives with the objective of increasing long-term shareholder value," said Don L. Blankenship, Massey's chairman and chief executive officer, in a news release.
"Massey has worked diligently for many years to build and maintain one of the strongest balance sheets in the industry. We expect the board's actions today to allow us to retain the confidence of our customers, vendors and financial partners, protect us from unexpected downturns and give us the flexibility to respond to strategic opportunities."
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