Massey Coal, one of the United States' biggest coal companies, will be spun off on the New York Stock Exchange as a separately listed entity, Massey Energy, by the end of the year.
The decision, announced in June, follows a lengthy review by parent Fluor Corp about what to do with the Central Appalachian coal producer. Other options under consideration over the past year included joint ventures with other coal companies or an outright sale.
Existing shareholders will keep their Fluor stock, which will become Massey Energy shares, and will also be issued equal shares of the 'new' Fluor shares through a tax-free distribution.
Some analysts have questioned the wisdom of exposing current Fluor shareholders entirely to coal. Publicly held coal stocks have performed poorly in recent times on the NYSE.
Fluor chairman and CEO Phillip Carroll said the decision was a strategic, long-term decision, "not designed to produce a quick pop in the market".
The new company will gain independence from its giant parent but will also lose its financial muscle and cash backing. Analysts have predicted, however, that as a stand-alone company Massey would do better than some more highly-leveraged publicly traded coal companies.
Already considered a strong and aggressive player, Massey is an acknowledged low-cost producer and one of the leading US producers. The company is the fifth largest coal company in the US in terms of revenue, seventh largest in tonnage, and the top metallurgical coal producer.
Since 1987, Massey's coal reserves have grown from 771.1 million tonnes to 2.3 billion tonnes, the company said. In fiscal 1999, AT Massey reported assets of US$2 billion and an operating profit of US$147 million.
