Bidder's Statement - Peabody Energy

of personnel impacted is expected to be more than offset by the
expected overall increase in headcount in the medium to longer
term if skilled labour can be attracted.
(g) Marketing
It is intended to optimise Macarthur’s strategic opportunities
for its independent marketing function by building on, and
leveraging, the current marketing capabilities of Peabody Energy,
ArcelorMittal and Macarthur.
The objectives of Peabody Energy and ArcelorMittal will be
to bolster the existing team within Macarthur (the Macarthur
Marketing and Logistics Team) including Peabody Energy
and ArcelorMittal nominees that will manage product strategies,
marketing strategies, sales, pricing, distribution etc, to maximize
the presence of Macarthur coals in the marketplace. The
Macarthur Marketing and Logistics Team will be responsible for
presenting to Macarthur for consideration marketing and logistics
activities for all owned and partly owned Macarthur mines,
subject to existing rights of Macarthur’s joint venture parties, to
help achieve maximum value for Macarthur across the coal and
logistics value chain.
The Macarthur Marketing and Logistics Team will report and
engage with Peabody Energy and ArcelorMittal through regular
workshops and monthly reports.
(h) Logistics
It is intended to optimise Macarthur’s port and logistic operations
by also building on, and leveraging, the current capabilities of
Peabody Energy and Macarthur.
(i) Coal supply agreements
Other than the existing coal supply arrangements Macarthur has
with ArcelorMittal, there are no arrangements that entitle Peabody
Energy or ArcelorMittal to any future coal supply. It is intended
that ArcelorMittal’s agreement will continue in accordance with
its terms although, if there is no agreement on pricing where
required, ArcelorMittal will be entitled to purchase the same
volume product on terms no less favourable to ArcelorMittal when
compared to the terms offered to Macarthur’s other comparable
long-term contract customers.
(j) Customers
Peabody Energy and ArcelorMittal highly value the existing
relationships that Macarthur has with its customer base.
Existing contractual arrangements of Macarthur will of course
be honoured. It is also intended that these relationships be
strengthened for mutual benefit through a deeper understanding
of customer needs and the provision of product to meet those
needs. In particular, Peabody Energy and ArcelorMittal will be
focused on continuing to grow relationships and supply with
Macarthur’s customers in the high growth Asian region.
(k) Dividends and funding
It is the intention that Macarthur will continue to pay a dividend
consistent with its practice as at the date of this Bidder’s
Statement. However, the determination of Macarthur’s dividend
policy will be a matter for the Macarthur Board and will remain
subject to the Macarthur Board’s fiduciary duties.
On funding, it is intended that Macarthur will be funded pursuant
to the following hierarchy:
(1) its own reserves and cash generated by the Macarthur Group;
(2) an unsecured revolving credit facility sufficient to meet near
term operating needs;
(3) shareholder loans; and
(4) share issues.
(l) Confidentiality
As Peabody Energy and ArcelorMittal will be providing a wide
range of strategic advice to the Macarthur Board, it is expected
that each will have access to confidential and commercially
sensitive information of Macarthur. As parts of the ArcelorMittal
Group are existing customers of Macarthur, Peabody and
ArcelorMittal have agreed to implement necessary internal
protocols and information barriers to ensure that no confidential
or commercially sensitive information is transferred to the
procurement divisions or procurement related divisions of the
ArcelorMittal Group.
8.3 Intentions for Macarthur as a part owned
Subsidiary of PEAMCoal
(a) Introduction
This section 8.3 describes the intentions of PEAMCoal, the
PEAMCoal Directors, the Relevant ArcelorMittal Directors,
Peabody Energy and ArcelorMittal if PEAMCoal acquires Control
of Macarthur, but PEAMCoal does not become entitled to
compulsorily acquire the outstanding Shares under Part 6A.1 of
the Corporations Act.
In that circumstance, the intentions of PEAMCoal, the PEAMCoal
Directors and the Relevant ArcelorMittal Directors are as set
out in section 8.2, other than the intention to effect compulsory
acquisition as referred to in section 8.2(a) and other than as set
out in section 8.3.
(b) Limitations in giving effect to intentions and the interests of
independent shareholders
The ability to implement the intentions set out in this section 8.3
will be subject to among other things:
• the legal obligations of the Macarthur Directors to have regard
to the interests of Macarthur and Macarthur Shareholders;
• the requirements of the Corporations Act relating to
transactions between related parties;
• potentially the Listing Rules relating to transactions between
related parties;
• existing contractual obligations of Macarthur; and
• the results of the review referred to above at section 8.3(a).
The Macarthur Directors would need to make a decision on the
matters set out below after considering all these matters and
where appropriate, taking legal and financial advice in relation to
those requirements.
(c) Corporate matters
After the end of the Offer Period, it is intended:
• that the intentions described in section 8.2(e) and 8.2(h)
will be implemented to the extent that it is possible and
appropriate to do so (noting that any transactions between
Macarthur and PEAMCoal, between Macarthur and any
member of the Peabody Group or between Macarthur and
any member of the ArcelorMittal Group required to implement
those intentions are expected to be on arm’s length terms
and, if required by the Corporations Act or the Listing Rules,
PEAMCoal will seek any necessary approval of the other
shareholders of Macarthur to implement those intentions);
• to replace a number of the Macarthur Board with nominees of
Peabody Energy and ArcelorMittal so that Peabody nominees
will comprise the majority of directors on the Macarthur
Board and ArcelorMittal nominees will comprise the number
of directors closest to its proportionate indirect interest
in Macarthur. Certain existing members of the Macarthur
Board who are willing to continue may be retained. To the
extent required by the Listing Rules, independent directors
will be retained or appointed. The Peabody Energy and
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