Walter Energy Acquires Western Coal

On April 1, 2011, Walter Energy, Inc. (“Walter”) completed its acquisition of all the issued and outstanding common shares of Western Coal Corp. (“Western”) not already held by it for aggregate consideration valued at approximately $3.3 billion. The acquisition was completed pursuant to a court-approved plan of arrangement under the Business Corporations Act (British Columbia). The combined company creates the world's leading, publicly traded, “pure-play” metallurgical coal producer with greater diversification and access to metallurgical coal markets and customers in Europe and South America through Walter's coal mines in Alabama, and in Asia through Western's coal mines in British Columbia, the United Kingdom and West Virginia.

Pursuant to the arrangement, Walter indirectly acquired each outstanding Western common share not already owned by it in exchange for either (i) cash consideration, being $11.50 or (ii) share consideration, being 0.114 of a Walter common share, all subject to pro-ration. Based on the 261,741,458 Western common shares that participated in the arrangement, and after giving effect to pro-ration, 78,522,437 Western common shares were acquired by Walter for share consideration and 183,219,021 Western common shares were acquired by Walter for cash consideration, resulting in an aggregate purchase price of approximately $3.3 billion.

In connection with the arrangement, Walter obtained $2.725 billion in senior debt financing from a syndicate of lenders.

The debt financing was arranged by Morgan Stanley Senior Funding, Inc., Credit Agricole AG and Bank of Nova Scotia.

Prior to the arrangement, Walter acquired a 19.8 per cent strategic stake by having entered into a share purchase agreement with Audley Capital Management Limited and certain of its affiliates (collectively, “Audley”), pursuant to which Walter agreed to purchase 54,547,858 Western common shares held by Audley.

Walter was represented in-house by Catherine Bona, Vice-President, Interim General Counsel and Secretary, and in Canada by Osler, Hoskin & Harcourt LLP. The Osler team was led by Emmanuel Pressman and included Andrea Whyte, David Vernon, Heidi Wong and Ryan Sakamoto (M&A); Michael Matheson, Brodie Swartz and Benjamin Leith (banking); Steve Suarez and Amanda Heale (tax); Peter Franklyn and Kaeleigh Kuzma (regulatory) and Tristram Mallett (litigation). Simpson Thacher & Bartlett LLP acted as US counsel to Walter with a team that included Peter Gordon, Tom Lamprecht and Austin Hill (M&A); James Cross, Vanessa Bressler, Andrew Wolstan and Adam Shapiro (banking) and Michael Naughton (antitrust) and as UK counsel to Walter with a team that included Adam Signy and James Connor (corporate). David Selley of acted as British Columbia counsel to Walter and David Friedlander (corporate) of Mallesons Stephen Jaques represented Walter in Australia.

Western was represented in-house by Global Head of Legal, Keenan Hohol and Tina Langford, and in Canada by Goodmans LLP, as transaction counsel. The Goodmans team was led by Michael Partridge and included Gesta Abols, Brian Savage and Ryan Done (M&A); Jon Northup and Mark Tozer (tax); Joel Schachter and Richard Annan (regulatory) and Michelle Dobranowski (labour). Lawson Lundell LLP acted as corporate counsel to Western with a team that included Michael Lee, Randall Chatwin, David Gedge and Tolek Strukoff (corporate/securities); Craig Ferris and Jude Popp (litigation) and Mandeep Dhaliwal (banking). Western was represented in the United States by Paul, Weiss, Rifkind, Wharton & Garrison LLP with a team that included Robert Schumer, Matthew Abbott and Ramy Wahbeh (M&A); Ted Maynard and Piibe Jogi (securities); David Mayo and David Buchwald (tax) and Dider Malaquin (antitrust); in the United Kingdom by Trowers & Hamlins LLP with a team that included Richard Hildebrand and James Lyons (corporate) and in Australia by Gadens with a team that included Douglas Goodman and Michael Kenny (corporate).

The lenders under Walter's senior debt financing were represented in Canada by Stikeman Elliott LLP. The Stikeman Elliott team was led by Daphne MacKenzie (banking) and included Kelly Niebergall (banking); Sean Vanderpol (securities); Larry Cobb (environmental); Rachel Hutton (real property) and Francesco Gucciardo (tax). White & Case LLP acted as US counsel to the lenders with a team that included David Joyce, Alykhan Kurji, Binoy Dharia and David Medlar.

Audley was represented by Vincent Mercier, Peter Hong and Kateryna Yason (M&A); Anita Banicevic (antitrust) and Gerald Shepherd (US securities issues) of Davies Ward Phillips & Vineberg LLP.