Bidder's Statement - Peabody Energy

8 Intentions in relation to Macarthur
8.1 Introduction
The intentions of PEAMCoal, the PEAMCoal Directors, the relevant
ArcelorMittal Directors, Peabody Energy and ArcelorMittal are set
out in this section 8. As set out in section 8.2(j) these intentions are
subject to a general operational review and as set out in section 8.6
reflect current intentions based on current information.
8.2 Intentions if Macarthur becomes a wholly
owned Subsidiary of PEAMCoal
(a) Introduction
This section 8.2 describes the intentions of PEAMCoal, the
PEAMCoal Directors, the relevant ArcelorMittal Directors,
Peabody Energy and ArcelorMittal if PEAMCoal acquires a
Relevant Interest in 90% or more of the Shares, and so becomes
entitled to proceed to compulsory acquisition of outstanding
Shares in accordance with Part 6A.1 of the Corporations Act.
If PEAMCoal becomes entitled to proceed to compulsory
acquisition, it may:
• proceed with the compulsory acquisition of the outstanding
Shares in accordance with the provisions of Part 6A.1 of the
Corporations Act; and
• following completion of the compulsory acquisition of the
outstanding Shares, cause PEAMCoal to apply for termination
of official quotation of the Shares on the ASX and arrange for
Macarthur to be removed from the official list of the ASX.
In that circumstance, the other intentions of PEAMCoal, the
PEAMCoal Directors, the relevant ArcelorMittal Directors,
Peabody Energy and ArcelorMittal are as set out below.
(b) Operational review
It is intended that Macarthur will continue to conduct its
current core businesses, namely the exploration, development,
production and marketing of coal products, within the context of
the intentions and plans set out in this section 8. However, after
the end of the Offer Period, it is intended to conduct a review of
Macarthur’s projects and operations on a strategic, financial and
operational level to:
• evaluate Macarthur’s performance, profitability and prospects;
• assess possible operational and strategic opportunities; and
• identify opportunities for revenue enhancement and operating
benefits derived from a larger portfolio of assets.
The specific intentions set out in this section 8 are subject to
among other things the results of this review.
(c) Corporate matters
If Macarthur becomes a wholly owned subsidiary of PEAMCoal,
it is intended to replace the members of the Macarthur Board
with PEAMCoal nominees. While replacement board members
have not yet been identified, it is intended that the majority of the
nominees to the Macarthur Board will be employees of Peabody
Energy or its Subsidiaries or otherwise engaged or nominated
by Peabody Energy. ArcelorMittal will be entitled to nominate the
number of nominees to the Macarthur Board that is proportionate
to its indirect interest in Macarthur.
It is also intended to change the financial year end of Macarthur,
and to the extent permissible its Subsidiaries, to 31 December.
(d) Project development
PEAMCoal intends to grow the business of Macarthur.
It is intended that PEAMCoal will explore the development
potential of the following of Macarthur’s project
development opportunities:
• Codrilla;
• Coppabella Underground;
• MDL 162;
• Monto;
• Moorvale Underground;
• Moorvale West;
• Olive Downs North;
• Olive Downs South;
• Vermont East;
• West Rolleston; and
• Wilunga.
PEAMCoal intends to examine whether it is possible to accelerate
production from any of these projects. Proceeding with any of
these project development opportunities will be subject to the
assessment of economic conditions, market conditions and
expected economic returns at the appropriate times and, in
the case of MDL 162, the successful resolution of the matters
described in section 6.5(e) above.
(e) Operational matters
It is intended to explore ways in which the technical and
operational expertise of Peabody Energy could be utilised for
the benefit of Macarthur by maximising the efficiency of current
Macarthur producing assets.
In particular, PEAMCoal will seek to utilise Peabody Energy’s
operational experience and expertise in the areas of:
• safety;
• open cut and underground mining;
• greenfield and brownfield project development;
• technical skills; and
• industrial relations.
It is envisaged that there would be a variety of technical services
provided by Peabody Energy to Macarthur at cost. Among
these include the exchange of people and information regarding
markets and logistics. The sharing of equipment by Peabody
Energy with Macarthur on arm’s-length terms could also occur.
It is expected that each of Peabody Energy and
ArcelorMittal may provide secondees to Macarthur (including
those referred to in section 8.2(f) and section 8.2(g) below) and
will be entitled to appoint nominees to the steering committees
for development projects and project development opportunities
of Macarthur.
(f) Impact on employees
There will be a review of the roles required for the Macarthur
senior management team. Peabody Energy will be entitled to
nominate the Chief Executive Officer, Chief Operating Officer
and Chief Marketing Officer and ArcelorMittal will be entitled
to nominate the Chief Financial Officer. At this stage, neither
Peabody Energy nor ArcelorMittal have identified specific
executives for these roles and will consider as part of their
review, the professional capabilities of the incumbents and
prospective alternates.
At an operational level, and as noted above, it is the intention
to grow the business of Macarthur. That growth would require
a significant contribution from Macarthur’s current employees,
noting the present tight labour market for people with operational
mining and project development expertise.
If as a result of the implementation of the above intentions, or
as a result of the operational review described above, there are
any redundancies, the relevant employees will receive benefits in
accordance with their contractual and other legal entitlements.
However, in terms of overall employment numbers, the number
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