Massey Energy tenders for 6.95% notes, 4.75% convertibles, starts exchange for 2.25% convertibles

New York, Nov. 22 - Massey Energy Co. announced it has begun tender and exchange offers as part of its previously disclosed capital restructuring and also said it plans to sell $725 million principal amount of new senior notes.

The Richmond, Va., coal miner launched cash tender offers for its $220.1 million of 6.95% senior notes due 2007 and $132.0 million of 4.75% convertible senior notes due 2023.

The company is also running a cash-and-stock exchange for its $175.0 million of 2.25% convertible senior notes due 2024.

Proceeds from the new $725 million of senior notes will be used to fund the tender for the 6.95% notes, the redemption of any 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 tender payment on offer for the 6.95% notes will 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.

Holders who tender by the consent deadline of 5 p.m. ET on Dec. 6 will receive the full amount. After that deadline but before the expiration of midnight ET on Dec. 20 the sum will be less the $15.00 per $1,000 consent payment.

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.

Pricing in the tender for the 4.75% convertibles will be set using a formula, with a maximum of $2,738.65 and a minimum of $1,449.33 per $1,000 principal amount. Pricing will be set at 5 p.m. ET on Dec. 20. Massey will also pay accrued interest up to but excluding the date of purchase.

Massey did not announce further details of the pricing formula.

The tender for the convertibles ends at 5 p.m. ET on Dec. 22.

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.

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 convertibles ends at 5 p.m. ET on Dec. 22.

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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