(Source: PRNewswire)NEW YORK, July 23 /PRNewswire/ -- Duquesne Capital Management, L.L.C. (Duquesne), the largest shareholder of Alpha Natural Resources, Inc. (ANR), confirms that it will vote against the proposed merger with Foundation Coal Holdings, Inc. (FCL). In proxy materials dated July 21st, ANR explicitly stated that it was seeking to respond to the issues and concerns presented in Duquesne's July 20th press release. Having now carefully reviewed ANR's new proxy materials, in conjunction with further overwhelming evidence disclosed in recent days in other coal companies' earnings releases and earnings calls, Duquesne has concluded that its earlier decision to vote against the merger was correct, and believes that the information provided by ANR simply fails to come to grips candidly and completely with the salient facts, as explained below.

ANR stated that FCL's 2010 EBITDA is expected to be in the range of $470mm to $530mm; Duquesne views that as a highly inflated range, which should be approximately 40% lower at closer to $300mm, and when the temporary above-market coal sales contracts that FCL has in place for thermal coal are backed out, the number should be closer to $200mm. In Duquesne's view, this makes a material difference in the merger analysis. Also, ANR provided no update to FCL's 2010 EV/EBITDA, which Duquesne views as a material omission given the change in the price of thermal coal. While ANR focuses on EV/EBITDA as the most appropriate analytical metric for its industry, ANR fails to provide its analysis on the resulting impact of the proposed merger on the pro forma EV/EBITDA. Duquesne sees the merger as 1.5 to 2.0 times dilutive to ANR shareholders on 2010 EV/EBITDA, and at least 2.5 times on an ongoing basis after stripping out the temporary above-market coal sales contracts. In its July 21st materials, ANR appears to suggest that Duquesne used the wrong benchmark metallurgical (met) coal price in its model. ANR is incorrect. Duquesne is using a realized price of $104.50 per short ton FOB the mine for ANR, based on a global seaborne price of $140 per metric tonne FOB Australia. Duquesne has also compared ANR's comments contained in its July 21st materials on the met and thermal coal market outlooks with those made in recent days by respected industry research analysts and other coal companies (Teck Resources Ltd., Walter Energy, Inc., Peabody Energy Corp.) in connection with their earnings releases and earnings calls, which places ANR in the posture of a blatant outlier to the downside as it relates to the met coal market and a blatant outlier to the upside as it relates to the US thermal coal market, in particular PRB coal. The commentary from comparable companies is further, mounting evidence that reinforces Duquesne's view of the greater value to be ascribed to met coal, which makes the proposed merger grossly dilutive.