Arch Coal Acquires Interest in Knight Hawk Coal
ST. LOUIS (August 2, 2006) – Arch Coal, Inc. (NYSE:ACI) today announced that it has acquired a one-third interest in Knight Hawk Coal, a growing coal producer in the Illinois Basin, in exchange for approximately $15 million in cash and 30 million tons of coal reserves.
"We expect this transaction to create meaningful value for our shareholders," said Steven F. Leer, Arch's chairman and chief executive officer. "With its strong management team and skilled workforce, Knight Hawk is well positioned for growth. We expect Illinois Basin coal to play an increasingly vital role in U.S. energy markets, and we view this transaction as a first step for Arch in re-entering this important region."
The transaction is expected to be accretive to earnings, effective immediately.
Following the transaction, Knight Hawk controls approximately 70 million tons of coal reserves in southern Illinois. The company expects to ship approximately 3 million tons of coal from its mining operations during 2006, and to expand production to nearly 5 million tons by 2008, assuming market conditions warrant.
In addition to its interest in Knight Hawk, Arch controls approximately 230 million tons of coal reserves in southern Illinois.
St. Louis-based Arch Coal is the nation's second largest coal producer. Through its subsidiary operations in Wyoming, Utah, Colorado, West Virginia, Kentucky and Virginia, Arch Coal provides the fuel for approximately 6% of the electricity generated in the United States.
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