Severstal Resources will buy Penfold Capital Acquisition Corporation for $7.95 per share after Penfold has taken over PBS. The new joint-stock company will be called PBS Coals Limited.
PBS is engaged in the mining, processing and sale of metallurgical and thermal coal in Somerset County, Pennsylvania, U.S., the Russian company said on its website. PBS's operations have an annual capacity of over 4 million tons of metallurgical coal.
Severstal Resources plans to finance its offer to buy PBS shares from its owner equity. However, the deal requires official approval from a number of bodies, and is expected to be closed in mid-October.
After the acquisition, PBS will be incorporated into Severstal Resources.
The boards of directors at both PBS and Penfold have unanimously approved the deal, saying it is in their shareholders' interests.
PBS has six underground and six surface coal mines. It produced around 2.4 million metric tons of coal, including 1.5 million metric tons of coking coal, in the financial year that ended on March 31, 2008. PBS reserves amount to 133.5 million metric tons of coal, and its coal resources total 228.3 million metric tons. PBS has an experienced team of managers, and it sells its products for less than other global producers.
Severstal Resources quoted its CEO Roman Deniskin as saying: "Our significant experience with coal mining in Russia leaves us well positioned to make the most of our acquisition of PBS, ensuring its continued growth by providing additional management and operational expertise."
The executive added that his company would double the output of coking coal at PBS Coals Corporation after the acquisition.
"I would like to see the output double in the mid-term," he said, adding that Severstal's U.S. facilities currently had a demand for around 5 million metric tons of high-quality coking coal.
"The acquisition will cover around half of the demand," Deniskin said.
