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May 2, 2011 4:06 PM

Jones Day, Simpson Lead on Wilbur Ross's $3.4 Billion Coal Sale

Posted by Brian Baxter

Wilbur Ross's big bet on the U.S. coal industry seven years ago is finally paying off. The well-known distressed investor formed International Coal Group (ICG) in 2004 after heading a group that bought select assets of Horizon Natural Resources in a bankruptcy auction.

On Monday, Ross sold ICG to Arch Coal for $3.4 billion in cash, according to The New York Times. The deal makes St. Louis-based Arch Coal the second-largest supplier of coal for steelmaking in the U.S. and a top-five overall global coal producer and marketer.

Jones Day M&A partner Randi Strudler is leading a team from the firm advising ICG on the sale that includes M&A chair Robert Profusek, M&A partner Randi Lesnick, employee benefits partner Manan "Mike" Shah, tax partner Candace Ridgway, banking and finance cohead Brett Barragate, antitrust partner Tom Smith, real estate partner William Herzberger, and environmental of counsel Ronald Janke. The firm has served as longtime outside counsel to Ross and ICG and handled the company's $256 million IPO in 2005.

Roger Nicholson, a former partner at Jackson Kelly, serves as general counsel for ICG. The Scott Depot, W.Va.-based company has seen its value rise as surging demand from China for steel has resulted in a corresponding need for steel-making coal. Ross, who is ICG's second-largest shareholder after Toronto-based Fairfax Financial, stands to receive $170 million from the company's sale, according to The Business Insider.

Simpson Thacher & Bartlett M&A partner Mario Ponce, employee benefits head Alvin Brown, tax partner Steven Todrys, and finance partners Patrick Ryan, Christopher Brown, and Risë Norman are advising Arch Coal on the deal. The St. Louis-based company's general counsel is Robert Jones, who was elected to the position in August 2008.

Arch Coal's acquisition of ICG is the latest sign of M&A activity in the coal and steel sector. In January, Alpha Natural Resources acquired Massey Energy in a $7.1 billion cash-and-stock deal that created the third-largest metallurgical coal producer in the world. A few days later Japanese steel producers Nippon Steel and Sumitomo Metal Industries announced they would combine operations in a $35 billion deal.

Covington & Burling corporate partner J.D. Weinberg and associate Silas Lum are advising UBS, lead financial adviser to ICG on its sale to Arch Coal. The deal is expected to close in the second quarter of 2011.

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