Massey Energy accepts tenders for $189.5 million 6.95% notes, sets pricing for 4.75% convertibles

By Jennifer Chiou

New York, Dec. 21 - Massey Energy Co. said it accepted tenders from holders of $189.5 million or 86.1% of its $220.1 million of 6.95% senior notes due 2007.

The offer ended at midnight ET on Dec. 20.

For each $1,000 principal amount of 6.95% notes tendered by the consent deadline, Massey will pay $1,028.79 including the $15.00 consent payment.

The consent deadline was 5 p.m. ET on Dec. 6.

Announcing the offer, Massey said the payment for the 6.95% notes would be set as the present value of the future principal and interest payments on the notes minus accrued interest up to but excluding the date of purchase.

The company also announced it fixed pricing in its tender offer for its $132.0 million of 4.75% convertible senior notes due 2023.

Massey Energy said it will pay $2,271.91 per $1,000 principal amount of 4.75% notes, including the consent payment.

Pricing was fixed at 5 p.m. ET on Dec. 20 and the offer ends at 5 p.m. ET on Dec. 22.

Pricing in the tender for the 4.75% convertibles was set using a formula of 51.573 times $40.95 - the weighted average price of its common stock from Dec. 5 through the pricing date - plus $160.00, with a minimum of $1,449.33 and a maximum of $2,738.65 per $1,000 principal amount.

The Richmond, Va., coal miner launched the tender offers on Nov. 22 as part of a capital restructuring plan. It is also running a cash-and-stock exchange for its $175.0 million of 2.25% convertible senior notes due 2024.

Proceeds from an offering of $760 million of new 6 7/8% senior notes due 2013 will be used to fund the tender for the 6.95% notes, the redemption of the remaining $30.6 million of 6.95% notes not tendered, the tender for the 4.75% convertibles and the cash payment in the exchange for the 2.25% convertibles.

The new 6 7/8% notes were sold at $992.43 per $1,000 note.

The tender for the 4.75% convertibles is subject to the receipt of proceeds from the new notes and at least 80% of the 2.25% convertibles being exchanged.

Massey is also soliciting consents to amend the note indenture to reduce the minimum required notice period for a call to three days from 30. If Massey completes the tender and receives the necessary consents, it plans to redeem the notes after the tender offer finishes.

The tender for the 6.95% notes is subject to the receipt of proceeds from the new notes and the consent of holders of a majority of the notes.

In the exchange for the 2.25% convertibles, Massey is offering 29.7619 shares plus $230.00 in cash per $1,000 principal amount. Massey will also pay accrued interest up to but excluding the date of exchange.

The exchange for the 2.25% convertibles is subject to the receipt of proceeds from the new notes.

UBS Investment Bank is dealer manager for the tender offers (888 722-9555 ext. 4210 or 203 719-4210). Global Bondholder Services Corp. is exchange agent for the exchange offer (866 924-2200 or 212 430-3774). Global Bondholder Services is also information agent for all the offers.

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