New Issue: Arch Coal sells $2 billion of senior notes in eight-, 10-year tranches

By Paul A. Harris

Portland, Ore., June 8 - Arch Coal, Inc. priced a combined $2 billion of eight- and 10-year senior notes (B1/B+/) on Wednesday, according to an informed source.

The St. Louis-based coal producer priced a $1 billion tranche of eight-year notes at par to yield 7% and a $1 billion tranche of 10-year notes at par to yield 7¼%.

Both tranches saw the yield printing on top of price talk.

Morgan Stanley & Co., Inc., PNC Capital Markets, Bank of America Merrill Lynch, RBS Securities Inc. and Citigroup Global Markets Inc. were the joint bookrunners.

The company plans to use the proceeds to partially fund its acquisition of International Coal Group Inc. and related transactions, including the redemption, payment of cash resulting from the conversion of, or other retirement of outstanding International Coal debt.

Issuer:	Arch Coal, Inc.
Amount:	$2 billion
Securities:	Senior notes
Bookrunners:	Morgan Stanley & Co. Inc., PNC Capital Markets, Bank of America Merrill Lynch, RBS Securities Inc., Citigroup Global Markets Inc.
Senior co-managers:	BMO Capital Markets Corp, Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, Wells Fargo Securities, LLC
Co-managers:	Natixis Securities North America Inc., Santander Investment Securities Inc., Mitsubishi UFJ Securities (USA), Inc., U.S. Bancorp Investments, Inc., Banco Bilbao Vizcaya Argentaria, SA, FBR Capital Markets & Co., Morgan Keegan & Co., Inc., RBC Capital Markets, LLC
Trade date:	June 8
Settlement date:	June 14
Ratings:	Moody's: B1
	Standard & Poor's: B+
Distribution:	Rule 144A with registration rights and Regulation S
Marketing:	Roadshow
Eight-year notes
Amount:	$1 billion
Maturity:	June 15, 2019
Coupon:	7%
Price:	Par
Yield:	7%
Spread:	455 bps
Call features:	Make-whole call at Treasuries plus 50 bps until June 15, 2014, then callable a premium
Equity clawback:	35% at 107 until June 15, 2014
Price talk:	7%
10-year notes
Amount:	$1 billion
Maturity:	June 15, 2021
Coupon:	7¼%
Price:	Par
Yield:	7¼%
Spread:	429 bps
Call protection:	Make-whole call at Treasuries plus 50 bps until June 15, 2016, then callable at a premium
Equity clawback:	35% at 107.25 until June 15, 2014
Price talk:	Yield 25 bps greater than eight-year notes

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