Alpha Natural shareholder to vote against Foundation Coal merger

By Lisa Kerner

Charlotte, N.C., July 28 - Alpha Natural Resources, Inc.'s largest shareholder, Duquesne Capital Management, LLC, confirmed that it will vote against the company's proposed merger with Foundation Coal Holdings, Inc. on Friday.

According to Duquesne, Proxy Governance, Inc. recommended that Alpha Natural shareholders vote against the proposal in part because, as Duquesne suggested, the transaction will substantially increase balance sheet risk for Alpha Natural and reduce the company's financial flexibility.

RiskMetrics Group, Inc. reaffirmed its recommendation that Alpha Natural shareholders vote in favor of the deal, according to a Duquesne news release.

The proxy advisory firm said Duquesne raised valid concerns about the proposed merger, but it noted that the shareholder waited two months to publicly object to it.

Duquesne said RiskMetrics failed "to address the merits of the crucial issues of whether a structural change has occurred in the global metallurgical and U.S. thermal coal markets, the economic relationship between those markets, and their implications upon the economics of the proposed transaction" for Alpha Natural shareholders.

On Monday, Foundation Coal said it expected its merger with Alpha Natural to close on Friday, shortly after shareholders from both companies vote on the proposed transaction.

In May, Alpha Natural and Foundation Coal agreed to combine in an all-stock transaction valued at $2 billion to form the third-largest coal producer in the United States.

As previously reported, Foundation Coal stockholders will receive 1.084 shares of the new company for each share of Foundation Coal. Each Alpha Natural share will automatically become one share of the combined company.

Foundation is a Linthicum Heights, Md.-based coal producer.

Alpha Natural, located in Abingdon, Va., supplies Appalachian coal to the steel industry, electric utilities and other industries.

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