Coal producer Arch Coal Inc. (ACI) announced that it will issue 44.0 million shares pursuant to an automatic shelf registration statement previously filed with the Securities and Exchange Commission.
Arch Coal intends to utilize the net proceeds from the equity offering for funding its acquisition of International Coal Group Inc. (ICO) and related transactions, including the redemption, payment of cash resulting from conversion of, or retirement of certain outstanding International Coal indebtedness.
In case the company fails to complete the acquisition, it will use the proceeds of the issue for general corporate purposes, which include capital expenditures, repayment of debt, stock repurchases, strategic combinations, additions to working capital and financing of future acquisitions.
As per the underwriting agreement, the underwriters to the issue were given an option to purchase 6.6 million additional shares of Arch Coal's common stock with in a period of 30 days following the offering to cover over-allotments, if any.
The company plans to finance the acquisition through an issue of debt and equity. Total shareholder equity of the company as of March 31, 2011, was $2,291.6 million. The debt-to-capital ratio of the company as of March 31, 2011 was 41%.
Arch Coal's earnings per share in the first quarter 2011 surpassed the year ago quarter's performance as well as the Zacks Consensus expectation. The company expects its 2011 earnings to range between $2.10 and $2.60 per share. The Zacks Consensus Estimates for second-quarter fiscal 2011, fiscal year 2011 and fiscal year 2012 are pegged at 62 cents, $2.50 and $3.92, respectively.
Arch Coal currently retains a Zacks #3 Rank (short-term Hold rating). The company competes with Peabody Energy Corp. (BTU) among others.
Based in St. Louis, Missouri, Arch Coal engages in the production and sale of steam and metallurgical coal. The company also ships coal to domestic and international steel manufacturers as well as international power producers.
ARCH COAL INC (ACI): Free Stock Analysis Report
PEABODY ENERGY (BTU): Free Stock Analysis Report
Be the first to comment