Another ICG shareholder files complaint over merger

By Jessica M. Karmasek | May 16, 2011

WINFIELD -- Another common stock shareholder has filed a complaint alleging "inadequate compensation" in International Coal Group's planned merger with Arch Coal Inc.

Timothy Eyster filed the potential class-action lawsuit in Putnam Circuit Court on Friday on behalf of himself and other common stock shareholders. He is suing ICG, its board of directors and Arch.

Eyster, like Damian Walker, who filed a potential class-action suit against ICG, its board and Arch on May 9, takes issue with the proposed sale of ICG to Arch at $14.60 per share.

On May 2, ICG and Arch issued a joint statement announcing they entered into a definitive agreement and plan of merger in connection with the proposed acquisition. Arch would acquire ICG, a Delaware corporation headquartered in Scott Depot, W.Va., in an all-cash transaction valued at $3.4 billion.

The plaintiffs in both cases allege that ICG's board of directors breached its fiduciary duties to its shareholders in merging with Arch.

Eyster, in his complaint, calls the sale process "flawed."

He points to the merger agreement's $115 million termination fee, which requires that ICG pay $115 million should it decide to accept a competing offer.

"The Termination Fee impairs (ICG's) Board of Directors from freely and effectively exercising their business judgment in the interests of (ICG's) shareholders and also discourages other potential bidders from emerging, including those who would be willing to pay more than $14.60 per share for the Company," Eyster wrote.

He continued, "If the Proposed Transaction is consummated, Arch and (ICG) insiders will enrich themselves by acquiring the public shareholders' interest in the Company without paying a fair and adequate price, thereby irreparably harming Plaintiff and the other (ICG) shareholders not affiliated with Arch."

ICG, its board and Arch are forcing "an oppressive and fundamentally unfair transaction" onto ICG's shareholders, Eyster says.

Like Walker, Eyster is seeking to enjoin the close of the proposed acquisition, which is scheduled to close at the end of the second quarter of 2011.

Eyster also is asking that the board "diligently avail themselves of all material information necessary to make an informed judgment concerning the fairness of the proposed transaction," and that it "fully and accurately disclose all material information to (ICG's) public shareholders so they can make an informed decision" on whether to tender their shares.

Counsel for the plaintiff include Kevin W. Thompson and David R. Barney Jr. of Thompson Barney in Charleston, W.Va.; Joseph E. White III and Lester R. Hooker of Saxena White PA in Boca Raton, Fla.; and Jonathan M. Stein, also in Boca Raton.

ICG is one of the leading producers of coal in Northern and Central Appalachia. It has 12 mining complexes located in West Virginia, Kentucky, Virginia and Maryland. It was founded in 2004 and was taken public in 2005.

Arch is one of the world's largest coal producers. According to its website, it contributes roughly 15 percent of America's coal supply. It has mining complexes in Wyoming, Utah, Colorado, West Virginia, Kentucky and Virginia.

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