* Arch Coal, Inc. (NYSE: ACI) and Bowie Resources, LLC, announced that they have entered into a definitive agreement under which Arch will sell to Bowie its wholly-owned subsidiary, Canyon Fuel Company, LLC (“Canyon Fuel”), for $435 million in cash, subject to customary adjustments for working capital and other items. Both companies have approved the transaction, which is expected to close in the third quarter of 2013.
Canyon Fuel includes the Sufco and Skyline longwall mines and the Dugout Canyon continuous miner operation, all located in Utah. In addition to these active operations and related support facilities, Bowie will receive approximately 105 million tons of bituminous coal reserves in Utah. After the transaction is completed, Bowie plans to keep the existing 725-person workforce in place at the Canyon Fuel operations.
Arch will retain its Mountain Coal Company’s West Elk mine in Colorado and approximately 300 million tons of coal reserves in the Western Bituminous Region, including bituminous reserves located in southern Wyoming. In 2012, the West Elk mine sold 6.7 million tons of high-quality, low-sulfur coal, of which roughly 40 percent was shipped into the seaborne thermal market. “West Elk is a valuable, low-cost asset with a broad market reach that includes customers in the eastern and western United States and in the international arena,” said Paul A. Lang, Arch’s executive vice president and chief operating officer.
As a result of the sale of its Utah operations, Arch expects to achieve cumulative capital and administrative cost savings of more than $200 million from 2014 through 2017. These expected future savings, which primarily represent capital spending to sustain current production levels, should further enhance Arch’s liquidity position.
Upon completion of the transaction, Arch will receive cash proceeds of $435 million before adjustments and will recognize a pre-tax gain of approximately $120 million related to the sale of Canyon Fuel. This gain will be included in Arch’s adjusted earnings before interest, taxes, depreciation, depletion and amortization (“EBITDA”) calculation, in accordance with the company’s credit agreements.
In 2013, Arch forecast that Canyon Fuel would sell around 9 million tons of coal, primarily to regional power producers and domestic industrial facilities in Utah, Nevada and California. Based on such sales, Canyon Fuel was projected to generate pro forma EBITDA of roughly $90 million, with planned capital expenditures of $15 million to $20 million, in 2013.
Bowie has obtained a committed financing arrangement, led by Morgan Stanley Senior Funding Inc. and Deutsche Bank AG New York Branch, to fund the transaction.
Galena Private Equity Resources Fund (“Galena”) will provide a cash investment to acquire a minority equity stake in Bowie.
Consummation of the transaction is subject to certain governmental and regulatory conditions and approvals and other customary conditions.
FBR Capital Markets & Co. and Deutsche Bank are acting as financial advisors to Arch for the transaction, Bank of America Merrill Lynch is providing certain financial advisory services to Arch, and Simpson Thacher & Bartlett is providing legal counsel to Arch.
Morgan Stanley & Co. LLC is acting as the financial advisor to Bowie, and Baker Botts LLP and Fultz Maddox Hovious & Dickens PLC are providing legal counsel to Bowie.
* T-Mobile US, Inc. (NYSE: TMUS) announced that its wholly owned subsidiary has signed an agreement to purchase 10 MHz of Advanced Wireless Services (AWS) spectrum from U.S. Cellular (NYSE: USM) for $308 million in cash. The spectrum covers a total of 32M people in 29 markets in the Mississippi Valley region — notably in St. Louis; Nashville; Kansas City; Memphis; Lexington; Little Rock-North Little Rock; Birmingham; New Orleans; and Louisville. This additional spectrum will allow for an incremental roll-out of T-Mobile’s 4G LTE network coverage to new markets and expands the existing 4G LTE bandwidth in the important Mississippi Valley region.
“In today’s marketplace, spectrum is gold,” said John Legere, President and CEO of T-Mobile. “This is a rare opportunity to secure precious AWS spectrum in key markets that will immediately be put to use by both T-Mobile and MetroPCS customers. This deal expands our network and capacity, allowing for a broader roll-out of 4G LTE and an even faster and more reliable 4G experience for our customers – in addition to spurring competition in the wireless marketplace.”
The agreement is subject to approval by the Federal Communications Commission (FCC) and Department of Justice, and other customary closing conditions. Following regulatory approval, the transaction is expected to close in the fourth quarter of 2013.
* Boston Scientific Corp. (NYSE: BSX) entered into a definitive agreement to acquire Bard EP, the electrophysiology (EP) business of C.R. Bard (NYSE: BCR), for $275 million in cash. The company expects to close the transaction in the second half of 2013, subject to customary closing conditions.
This transaction supports Boston Scientific’s strategy to provide a robust portfolio of solutions for cardiac catheter ablations and other EP tools to diagnose and treat a variety of conditions in which the heart beats abnormally. The addition of Bard EP’s strong commercial team and complementary portfolio, including catheter and recording device technologies, would enable Boston Scientific to better serve the rapidly growing global EP market with a stronger and more comprehensive offering. Electrophysiology is a $2.5 billion global market that is growing at nearly 10 percent annually.
* Jetblue (Nasdaq: JBLU) shares moved higher on Friday after reports in Folha De S. Pualo said Azul’s founder, David Neeleman, wants to buy it and Portuguese Airline TAP. This idea is to merge the three into a giant Brazilian airline, said the report, which is unconfirmed.
Jetblue would be taken out in a hostile bid for $1.7 billion and TAP would fetch $1.5 billion. Private equity and BNDES may take stakes in the investment, along side Neeleman.
Neeleman denied the report, and Jetblue had no comment.
* Westport Innovations Inc. (Nasdaq: WPRT) has acquired BAF Technologies, Inc. (BAF) and its subsidiary, ServoTech Engineering, Inc. (ServoTech), subsidiaries of Clean Energy Fuels Corp. (Nasdaq: CLNE) for $25 million in Westport stock. Westport and Clean Energy also announced a $5 million joint marketing and sales program.
Westport believes that the amalgamation will create the largest product portfolio and largest market presence in the North American light duty natural gas vehicle (NGV) space. Specifically, Westport secures its position as Ford’s largest partner under the Qualified Vehicle Modifier (QVM) program with over 10 products and approximately 150 Ford authorized dealerships. The transaction allows both Westport and Clean Energy to focus on the significant growth opportunities as natural gas emerges as a global fuel for transportation.
Westport has committed $5 million to a new co-marketing program aimed at increasing the natural gas vehicle market, and will allow Westport to provide purchase incentives for fleets, including fuel credits, and includes a commitment from Clean Energy to purchase Westport products.
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