International Coal begins make-whole conversion period for 9% notes

By Susanna Moon

Chicago, June 15 - International Coal Group, Inc. announced the make-whole conversion period for its 9% convertible senior notes due 2012 after the acquisition by Arch Coal, Inc. on June 15.

The conversion period will run through the put date, which will be between July 5 and Aug. 17. The notes are putable at par because of the fundamental change that occurred.

Arch Coal offered $14.60 for each share of International Coal common stock in a tender offer that ended June 14, and the merger was completed at 12:01 a.m. ET on June 15.

After completion of the offer, a make-whole fundamental change occurred, and the conversion rate for the conversion period was increased by 0.0723 common shares per $1,000 principal amount of notes.

Holders who convert during the make-whole conversion period will receive an amount in cash equal to the make-whole conversion ratio of 163.8859 multiplied by $14.60.

For each $1,000 principal amount of notes converted during the make-whole period, holders will receive $2,392.73414. Only holders who convert their notes during the make-whole conversion period will receive the make-whole increase, according to a company press release.

If a holder converts notes on or after June 15, they will be convertible into the same type of the merger consideration payable to stockholders in the merger.

Holders of securities surrendered for conversion after the expiration of the make-whole conversion period will be entitled to receive $2,391.67856 in cash for each $1,000 principal amount of securities surrendered for conversion.

The company said on June 9 that it would begin a make-whole conversion period for its 4% convertible senior notes due 2017 and 9% convertibles after the acquisition by Arch Coal.

International Coal said it would send a notice of the fundamental change to the noteholders within 20 business days of the completion of Arch Coal's tender offer, and the make-whole conversion period would end 20 to 35 days after the notice is mailed.

The 4% notes are currently convertible at a rate of 172.0874 shares per $1,000 principal amount of notes. The make-whole conversion ratio is 179.0880. For each $1,000 principal amount of notes converted during the make-whole period, holders will receive $2,614.6848

International Coal's stock closed at $14.57 (NYSE: ICO) on June 9.

International Coal and Arch Coal are coal producers based in Scott Depot, W.Va., and St. Louis, respectively.

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