Exhibit 99.2
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| THE POWER WITHIN Building a U.S. Coal Industry Powerhouse — and a World-Class Global Met Franchise |
| Arch Coal, Inc. Acquisition of International Coal Group, Inc. |
| May 2011 |
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| Forward-Looking Information |
| This presentation contains “forward-looking statements” — that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from changes in the demand for our coal by the domestic electric generation industry; from legislation and regulations relating to the Clean Air Act and other environmental initiatives; from operational, geological, permit, labor and weather-related factors; from fluctuations in the amount of cash we generate from operations; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. For a description of some of the risks and uncertainties that may affect our future results, you should see the risk factors described from time to time in the reports we file with the Securities and Exchange Commission. |
| This presentation includes certain non-GAAP financial measures, including Adjusted EBITDA. These non-GAAP financial measures are not measures of financial performance in accordance with generally accepted accounting principles and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income from operations, cash flows from operations, earnings per fully-diluted share or other measures of profitability, liquidity or performance under generally accepted accounting principles. You should be aware that our presentation of these measures may not be comparable to similarly-titled measures used by other companies. |
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| We’re building a U.S. coal industry powerhouse —and a world-class global metallurgical coal franchise |
| Leading Met2ndlargest U.S. (top 10 global) met producer |
| 1. Coal SupplierBlending synergies will optimize met franchise Significant reserve expansion opportunitiesGrowth25% reserve boost to create #2 U.S. coal reserve holder |
| 2. Profile85% increase in met coal volumes by 2015 |
| Build out of thermal platform in new basins and for export |
| MarketMajor producer in under-supplied met markets |
| 3. LeverageHighly levered to improving domestic thermal markets |
| Growing player in robust seaborne thermal marketsShareholder Most DiversifiedOperations in every major supply basinValue |
| 4. U.S. ProducerStrategically balanced met/thermal portfolio #1 or #2 position in core operating regionsCultureShared culture of safety and environmental commitment |
| 5. FitLow-cost operations in every major domestic supply basin Union-free workforce with minimal legacy liabilitiesStrategicAccretive to EPS in first full year after close |
| 6. TransactionEstimated annual synergies of $70-80 million Substantial pro forma free cash flow generation |
| Slide 3 |
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| Transaction details |
| Purchase Price• $14.60 per share in cash |
| • Total transaction value of $3.4 billion*Structure• Cash tender offer with back end merger |
| • Shareholders who own 17% of ICG have agreed to tender sharesFinancing• Committed financing in place to fund acquisition |
| • Permanent financing will be a mix of debt and sufficient equity to retain existing credit rating |
| • Majority debt financing |
| Conditions• Minimum tender condition of 50.1% |
| • Regulatory approvals and other customary closing conditionsTiming• Tender to commence around the middle of May |
| • Expected to close by mid-year 2011 |
| * Based on conversion of ICG’s convertible senior notes andSlide 4remaining net debt of approximately $63 million. |
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| Combination Strategic Rationale |
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| Arch will become the 2ndlargest U.S. met coal producer — and a top 10 global met supplier |
| Top Five U.S. Metallurgical Coal Producers• Arch will havesignificant scale |
| (2011 expected sales, in millions of tons) |
| andleveragein domestic and |
| 25 |
| international met coal markets |
| 11 |
| • With optimal use of Arch’s existing |
| ICG 8 8 8 |
| export capabilities, the combined |
| 6 |
| company will become alarger met |
| ANR* ACI* PCX WLT* CNX CLF coal seaborne supplier |
| • Futuregrowth opportunitiesat |
| Top Ten Global Metallurgical Coal Producers |
| (2011 expected sales, in millions of tons)the combined entity will likelylift |
| 65 met volume levelsmeaningfully |
| 27 25 |
| over the next five years |
| 17 16 16•Undeveloped high-vol A met |
| 14 14 |
| 11 coal reservesshould allow Arch |
| 10 |
| ICGto become an even larger global |
| BHP TCK ANR* WLT* AAL MTL XTA RIO ACI* BTUsupplier of met coal |
| Sources:ACI, Wall Street Research and Public DataSlide 6* Pro Forma for ACI, ANR and WLT |
| WLT in U.S. chart excludes Canadian production |
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| We expect continued strength in world met coal demand driven by growth in global steel consumption |
| Growth in World Steel Consumption |
| (in billions of tonnes of finished steel)• Growth in world steel consumption |
| 2.5 |
| is projected to increase |
| 2.0 |
| approximately60 percentduring1.5the next decade — with Asia1.0 expected to drive met coal demand0.5going forward0.0• With production and transportation |
| 2000 2005 2010P 2014P 2020P |
| constraints,global met coal |
| Projected Deficit in Seaborne Coal Supply Trade |
| (in millions of tonnes)supply will remain tightfor the |
| 0next five years and likely beyond-25• Internal forecasts suggest that global seaborne coal markets will |
| -50beunder-suppliedthrough at least 2015 |
| -752011P 2012P 2013P 2014P 2015P |
| Sources:World Steel Association and ACI |
| Slide 7 |
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| The acquisition provides expanded customer offerings through optimal met coal blending opportunities |
| 2010 Seaborne Metallurgical Coal Supply• The U.S. is asignificant supplier |
| (in millions of tonnes)of seaborne metallurgical coal—second only to Australia |
| 159 |
| Met• Blending Arch’s large volume of40%high-vol coal with ICG’s complementary quality coals:PCI/Met— Maximizes value of combinedBlend51company’s coals inseaborne 18% 26 18 tradevia Arch’s existing and |
| 15expanding port access |
| Australia U.S. Canada Russia Mongolia |
| — Createssynthetic mid-vol |
| Low-Vol Mid-Vol High-Vol coals, which command highest market premium |
| — Expandsproduct offeringsin low, mid and high-vol segments |
| Slide 8 Sources:Wood-Mac and ACI |
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| The acquisition provides a compelling growth opportunity to double metallurgical coal volumes by 2014 |
| Metallurgical Coal Volumes |
| (in millions of tons)15.0 12.0 Tygart Valley #1 Baltimore Ports Tygart Valley #2, #3 9.0 Norfolk Ports |
| 6.0 |
| • Build-out ofTygart Valley#1 mine will boost3.0future metallurgical coal volumes by 2014 |
| • Portfolio of Mountain Laurel and Tygart coal mines will createworld-class metallurgical |
| 0.0 |
| 2010 2011E By 2014 By 2015 coal asset base |
| Arch ICG Expanded Platform•Undeveloped high-vol A reserves(115 million tons) create opportunities for further volume growth over next five years |
| Slide 9 |
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| The acquisition greatly augments Arch’s platform for future growth in the Illinois Basin |
| • The 2.5 million tpy Viper Mine is alow-Illinois Basin costand highly competitive operation |
| • With the addition of ICG, Arch’s coal reserves will climb to736 million tonsin the Illinois Basin |
| Viper Mine |
| • Arch owns a 49% equity stake in KnightMacoupin Reserves Hawk, which sold 4 million tons in 2010 |
| • With the construction of Lost Prairie, |
| Lost Prairie Arch could have 10-12 million tonsof |
| Reservesproduction in this basin, destined for |
| Knight Hawk Complex* domestic and export thermalmarkets |
| Legend• Arch is building a large portfolio oflow- |
| Arch Assetschlorine assets in the Illinois Basin, |
| ICG Assets/Reserves which should yield a significant |
| River Docks ACI Headquarters advantage in the marketplace |
| Sources: ACI, VentyxSlide 10*49% equity interest |
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| Arch will play a growing role in the global seaborne met and thermal coal trade |
| • Current export capabilities can further liberate ICG’s met and thermal productionEast Coast• Own 22% interest in DTA in Newport News, VA which has throughput capacity of ~20 million tpy |
| • Ownership and throughput rights at riverGulf Coastfacilities in Kentucky and Illinois |
| • Ability to blend ILB coals with products from (New Orleans) every major operating region for sale into the seaborne market is unmatched |
| • Secured 38% interest in Millennium Bulk Terminals in Washington stateWest Coast• Agreement with Ridley Terminal in Canada |
| • Commitments to move Western Bituminous coals through ports in California |
| Slide 11 |
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| Around the world, countries are building coal plants to fuel electricity needs |
| New Coal-Fueled Generation Coming Online by 2015 Under249 GW(Capacity under construction, in GW, from 2011-2015) Construction790 million tonsTotal425 GW |
| 1.4 billion tons |
| Europe CIS countries United States China |
| 4 17 |
| 8 83 India2 97 Latin America5 27 Africa 6 |
| Other Asia Middle East 425 GW of total coal-fueled capacity is planned to be online by 2015 ... and will be fueled by 1.4 billion tons of coal |
| Slide 12 |
| Sources:ACI and Platts International, estimates based on plants currently under construction or planned |
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| Acqui sition strengthens Arch’s position as one of the largest coal producers in the U.S. and the world |
| Top Five U.S. Coal Producers Top Five U.S. Reserve Holders Top Five Global Coal Producers |
| (in millions of tons) (in billions of tons) (in millions of tons) |
| 246 |
| 431 |
| 7.8 179 |
| 248 246 5.5 122 5.0 |
| 4.4 179 97 |
| 122 |
| 641.8 |
| BTU ACI * ANR* CLD CNX BTU ACI * ANR* CNX PCX Coal Shenhua BTU ACI *ANR* India#2 #2 #4 Slide 13 Sources:ACI, Ventyx, Company filings * Pro forma |
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| Arch will be the #1 or #2 producer in each of the major low-sulfur basins |
| Top Producers in Southern PRB**•PRB: Arch is thesecond largest |
| 141 |
| 128overall producer in the southern |
| 74PRB — and the largest producer |
| 49 |
| 26of 8800-Btu coal |
| Peabody Arch Cloud Peak Alpha Kiewit |
| Top Producers in Western Bituminous**•WBIT: Arch is theleading |
| producerin the Western |
| 16 |
| Bituminous Region, where export |
| 9 8 |
| 5opportunities are increasing |
| Arch Pacificorp Peabody Chevron |
| Top Producers in CAPP**•CAPP: Arch will be the second largest producer and thelow |
| 53 cost leaderin the region, with a22large volume mix of met coal |
| 17 106Alpha* Arch* Patriot Consol James River |
| Sources:ACI, Ventyx |
| * Pro forma |
| Slide 14 |
| ** Figures based on 2010 sales data for ACI and MSHA production data for peers, in millions of tons |
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| Acquisition cements Arch’s position as the most diversified U.S. coal producer |
| 5.5-Billion-Ton Reserve Base |
| Thermal reserves |
| (pro forma reserves at 12/31/10)Northern PowderMet/PCI reserves |
| River Basin |
| 1,353 million |
| Northern Appalachia Southern Powder 189 million River Basin 262 million |
| 1,905 million |
| Central Appalachia Western Bituminous 464 million |
| 455 million 169 million |
| Illinois Basin |
| 73 |
| 6 million |
| • Expands operations to every major coal-supply basin |
| • Extends portfolio to include wholly owned operations in ILB and NAPP |
| • Creates unmatched U.S. product slate, with representation in all major basins |
| Slide 15 |
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| Arch’s newly expanded platform provides a strategically balanced thermal and met coal portfolio |
| 2010 Pro Forma Tons Sold 2010 Pro Forma Revenues 2010 Pro Forma EBITDA(percent of total tons by region) (percent of revenues by region) (percent of segment EBITDA by region) |
| 83% 50% 50% Western Eastern* |
| Sources:ACI, ICG company filingsSlide 16 *Eastern operations include Illinois Basin |
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| In terms of compatibility, we make a good match |
| Safety and Environmental Low-Cost Operator |
| Existing safety and environmental values Strong operational management team that provide a solid foundation on which to build mirrors Arch’s philosophy of operating large-scale, low-cost mines; production mix skews heavily underground in Appalachia |
| Coal Industry Powerhouse |
| Similar Workforce Clean Balance Sheet |
| High-performing, productive and union-free Low level of legacy liabilities will allow Arch workforce that is focused on creating to maintain one of the cleanest balance shareholder value sheets in the U.S. coal industry |
| Slide 17 |
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| Arch has a proven management team with a record of highly successful transactions |
| • Highlyexperienced senior managementteam |
| — Top 10 officers have an average of 25+ years experience in the industry |
| • Exceptional track record of integrating assets |
| •Proven ability to de-lever balance sheetfollowing acquisitions |
| — Nearly $3 billion in acquisitions since formation as public company |
| 9 Ashland Coal9 ARCO Coal Company9 North Rochelle9 Jacobs Ranch |
| • Completed major organic mine developments over the past decade |
| • Recognized as one of industry’s most skillful operators |
| Slide 18 |
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| ICG offers significant synergies with Arch; Arch has a history of exceeding synergy targets |
| Synergies with ICG |
| MarketingCreating synthetic mid-vol product Leveraging broader product slate |
| Unlocking export value via logistics networkOperatingPurchasing savings Insurance / bonding cost savingsSG&AAdministrative savings |
| Total $70 million — $80 million |
| History of Exceeding Targets |
| Transaction Announced Synergies Captured Synergies |
| North Rochelle $15 — $20 million ~$30 million Jacobs Ranch $45 — $55 million ~$60 million |
| Slide 19 |
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| Deal Dynamics |
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| The combined company presents a strong pro forma estimated financial outlook |
| Revenues(in $ billions) |
| $5.0+• Pro forma revenues of$3.8+ $5+ billion |
| • Expectedgrowth in EBITDA |
| Arch Arch pro formaof nearly 40 percent |
| Adjusted EBITDA(in $ millions)$1,370• Improved EBITDA margin to |
| $75* ~27 percent of revenues$990 |
| • Prudent management of capital expenditures |
| Arch Arch pro forma•Significant cash flow |
| Capital Spending(in $ millions)generationcapabilities |
| $625 $390 |
| Notes:Arch Arch pro forma |
| 2011 estimated data represents mid-point of provided guidance by respective companies in Q1 earnings releases. |
| Estimated revenues based on production and average price guidanceSlide 21* Represents average yearly run-rate synergies |
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| Fully committed acquisition financing |
| • Fully committed bridge facility by Morgan Stanley and PNC |
| — Sufficient to fund acquisition and redeem ICG’s debt |
| • Permanent financing —Mix of debt and equity —Majority of financing in debt securities —Objective to retain current credit rating |
| • Targeting new revolver of $1.5 billion |
| • Prudent financing to retain flexibility and sound liquidity position going forward |
| Slide 22 |
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| Arch maintains one of the cleanest balance sheets in the U.S. coal industryLegacy Liabilities of Largest U.S. Coal Companies• Lowest level oflegacy liabilities(at 12/31/10 pro forma, in $ millions) versus largest public U.S. coal4,451companies•Low legacy liabilities at ICG•Approximately two-thirds of Arch’s pro forma legacy liabilities1,951are comprised of reclamation1,7921,657 liabilities640 CNX PCX ANR* BTU ACI* Workers’ CompPost-Retirement Medical PensionReclamationSources:ACI and Public DataSlide 23* Pro Forma |
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| Acquisition creates a U.S. coal industry powerhouse —and a world-class met coal franchise |
| 1. No. 2 U.S. (Top 10 Global) Met Coal Producer |
| 2. Compelling Future Growth Profile |
| 3. Significant Leverage to Met/Thermal Markets |
| Shareholder Value |
| 4. Most Diversified and Balanced U.S. Producer |
| 5. Right Culture Fit |
| 6. Financially Strong, Strategic Transaction |
| Slide 24 |
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| Building a U.S. Coal Industry Powerhouse — and a World-Class Global Met Franchise |
| Arch Coal, Inc. Acquisition of International Coal Group, Inc. |
| May 2011 |
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| Important Additional Information |
| This presentation is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any shares of International Coal Group’s (“ICG”) common stock. The tender offer described herein has not yet been commenced. On the commencement date of the tender offer, an offer to purchase, a letter of transmittal and related documents will be filed with the Securities and Exchange Commission (SEC). The solicitation of offers to buy shares of ICG’s common stock will only be made pursuant to the offer to purchase, the letter of transmittal and related documents. Investors and ICG securityholders are strongly advised to read both the tender offer statement and the solicitation/recommendation statement that will be filed by ICG regarding the tender offer when they become available as they will contain important information. Investors and securityholders may obtain free copies of these statements (when available) and other documents filed with respect to the tender offer at the SEC’s website at www.sec.gov. In addition, copies of the tender offer statement and related materials (when available) may be obtained for free by directing such requests to the information agent for the tender offer or by directing such requests to Arch investor relations at the phone number or e-mail address below. The solicitation/recommendation statement and related documents (when available) may be obtained by directing such requests to ICG investor relations at the phone number or e-mail address below. |
| Arch Coal 314/994-2897 cinchiostro@archcoal.com Ross Mazza rmazza@intlcoal.com 304/760-2526 |
| Slide 26 |