The North American Coal Corporation announced that it acquired, through a wholly owned subsidiary, four related companies - Reed Minerals, Inc., Reed Hauling Inc., C&H Mining Company, Inc. and Reed Management, L.L.C. - from members of and entities controlled by the Reed family. These companies, which will be known as Reed Minerals, are based in Jasper, Ala., and are involved in the mining of bituminous coal.

The acquisition, which was funded using borrowings under North American Coal’s existing credit facility, was completed for a preliminary purchase price of approximately $62.5 million, less certain amounts specified in the purchase agreement to complete the transaction on a "cash-free, debt-free" basis. The terms of the transaction also include an earn-out contingent on the average coal selling price received on the first 15 million tons of coal sold by North American Coal from the Reed Minerals operations. The earn-out payments will be paid quarterly and, if payable, will commence in the third quarter of 2012.

The acquired operations mine and market steam coal and mid-to-high volatile metallurgical coal for sale primarily into the power generation and steel markets. Steam coal is primarily sold to a cooperative association which provides fuel under a long-term contract with a significant U.S. utility. Metallurgical coal is sold to several customers. The acquired companies operate three mines on leased reserves in Central Alabama. For the year ended 31 December 2011, the Reed Minerals companies sold 0.9 million tons of coal and had revenue of approximately $86.0 million and net income of approximately $4.0 million. North American Coal expects the acquisition to be accretive to earnings immediately.

"The acquisition of the Reed family’s mining business in Alabama provides North American Coal with an opportunity to expand our established surface mining business into bituminous coal markets," said Bob Benson, president and chief executive officer of North American Coal. "North American Coal has been looking for opportunities to grow. The Reed Minerals’ coal reserves, established reputation and location offer us that opportunity. The eight-year steam coal sales contract provides a stable revenue, profit and cash flow base while we further develop a metallurgical coal business platform. We believe this combination will offer the company, its customers and its employees a number of substantial benefits, which we expect will lead to significant opportunities for future growth and profitability," Benson said.