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Announcement:

Moody's reviews Alpha Natural's ratings for possible downgrade

Global Credit Research - 31 Jan 2011

Approximately $300 million of rated debt affected

New York, January 31, 2011 -- Moody's Investors Service placed all ratings of Alpha Natural Resources, Inc. (Alpha) on review for possible downgrade, including the company's Ba2 Corporate Family Rating (CFR), Ba2 Probability of Default Rating (PDR) and individual instrument ratings, as outlined below. The rating action was prompted by Alpha's announcement that it has agreed to acquire Massey Energy Company (Massey).

The following ratings were placed on review:

..Issuer: Alpha Natural Resources, Inc.

.... Corporate Family Rating at Ba2

.... Probability of Default Rating at Ba2

....Senior Unsecured Regular Bond/Debenture at Ba3

Outlook Actions:

..Issuer: Alpha Natural Resources, Inc.

....Outlook, Rating Under Review from Stable

RATINGS RATIONALE

Moody's review will focus on Alpha's ability to absorb Massey; the operating risk associated with the acquired assets; the integration risk of Massey's properties; the size and pace of the marketing and cost synergies that can be realized; the increased exposure to regulatory scrutiny and permitting requirements within Central Appalachia; future capital expenditure and production targets; the terms of the acquisition financing; and post-closing credit metrics and liquidity position.

Alpha will acquire all outstanding shares of Massey common stock, subject to customary closing conditions including stockholder approval of both companies. Under the terms of the agreement, Massey stockholders will receive, at the closing, 1.025 shares of Alpha common stock and $10.00 in cash for each share of Massey common stock. Based on the closing share price of Alpha common stock as of January 28, 2011, the agreement placed a value of $69.33 per share of Massey common stock (implying an $8.5 billion enterprise value for Massey) and represents a 21% premium to Massey's current share price. Upon completion of the transaction, Alpha and Massey stockholders will own approximately 54% and 46% of the combined company, respectively.

Alpha has obtained $3.3 billion in committed financing from Morgan Stanley and Citi which, in addition to existing cash balances, will be sufficient to finance cash consideration to Massey stockholders and to refinance certain existing Alpha and Massey debt. The acquisition is expected to close in mid-2011 and is subject to regulatory clearances and other customary closing conditions. Assuming the transaction closes as anticipated, existing rated debt at Massey (which includes the 6.875% unsecured notes due 2013 and the 2.25% convertible notes due 2024) will likely be repaid and all of Moody's ratings for Massey will be withdrawn.

Moody's last rating action on Alpha was on July 31, 2009, when we confirmed Alpha's ratings. The principal methodology used in this rating was the Global Mining Industry published in May 2009.

Headquartered in Abingdon, Virginia, Alpha is a coal company that has the capacity to produce between 90-95 million tons of coal annually, including roughly 10-12 million tons of metallurgical coal. The company produces in three principal U.S. coal basins - the Powder River Basin (59%), Central Appalachia (23%), and Northern Appalachia (18%).

Headquartered in Richmond, Virginia, Massey is a producer of approximately 38 million tons per annum of thermal and metallurgical coal in Central Appalachia.

New York
Frank Grbic
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Steven Oman
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's reviews Alpha Natural's ratings for possible downgrade
No Related Data.
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