Penfold Capital Acquisition Corporation
TSX VENTURE : PNA.P

PBS Coals Corporation

June 27, 2008 15:38 ET

PBS Coals Announces Strategic Investment by Talbot Group and Proposed Private Placement

TORONTO, ONTARIO--(Marketwire - June 27, 2008) - PBS Coals Corporation & Penfold Capital Acquisition Corporation (TSX VENTURE:PNA.P) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN

PBS Coals Corporation ("PBS" or the "Company") is pleased to announce that it has obtained a commitment from The Talbot Group of Australia to make a substantial strategic investment in the Company. PBS and certain of its major shareholders have agreed to sell, and The Talbot Group has agreed to purchase, an equity position of 19.9% in the Company at a price of $6.00 per share. In addition, The Talbot Group has agreed to purchase shares representing 19.9% of the Securities sold from treasury under the Private Placement announced below. The transaction with The Talbot Group is subject to customary conditions, including documentation and due diligence.

The Talbot Group, based in Brisbane, Australia, is a leading investor and manager of coal assets on a global basis and is privately owned by Ken Talbot. Mr. Talbot was the founding shareholder of MacArthur Coal and served as the CEO of MacArthur during is rapid growth to become the world's leading producer of high quality PCI coal. Recently, Mr. Talbot resigned from the Board of Directors of MacArthur after negotiating strategic investments by CITIC of China and Arcelor Mittal. Mr. Talbot has agreed to serve as a Director of PBS upon closing of the investment.

Dennis Wood, Managing Director of the Talbot Group, has agreed to serve as a consultant to PBS specifically in the areas of corporate development and strategic growth initiatives. Messrs. Talbot and Wood bring a combined 50 years plus of coal industry experience to PBS, as well as a global contact base of strategic relationships with steel manufacturers, coal producers, transportation and logistics providers, investors as well as the governments in related countries.

Mr. Wood offered the following insight into the investment: "We have committed to invest in PBS because we believe that the Company is in an ideal position to grow its production of high quality coking coals for many years to come. The Eastern US coalfields have long interested us as being one of the only global metallurgical coal producing regions with both available infrastructure and an abundance of attractive reserves. PBS, in our opinion, is in an outstanding position to take advantage of that growth due to its experienced management team, high quality reserves, low-cost operations and excellent access to ports. We look forward to participating as both a major investor and in providing strategic guidance to the Company while it executes a growth plan designed to make it a globally recognized independent coking coal supplier."

Robert Scott, President and CEO of PBS said, "We are delighted that The Talbot Group is participating in the growth plans for our Company. They have a strong track record of facilitating the rapid growth of exploration and coal mining assets into productive enterprises supported by a worldwide network of business relationships and strategic alliances." Colin K. Benner, Chairman of PBS commented, "We are particularly pleased that both Ken Talbot and Denis Wood will be directly involved in the strategic growth of our Company and actively engaged in continuing the growth of PBS."

PBS is also pleased to announce that it has appointed Cormark Securities Inc., GMP Securities L.P. and TD Securities Inc. on behalf of a syndicate to lead a private placement (the "Private Placement") of subscription receipts (the "Securities") of up to $245 million. The Securities, which will be priced in the context of the market, will include rights to receive shares of PBS from treasury and shares to be sold by certain existing shareholders of PBS.

Each Security represents the right to receive a common share of PBS for no additional consideration upon the occurrence of release conditions, including approval of the TSX and satisfaction of the conditions to the PBS and Penfold Capital Acquisition Corporation ("Penfold") business combination previously announced on June 17, 2008. The Private Placement is expected to be completed on or about July 31, 2008.

About the Company

PBS is a private British Columbia Corporation which owns 85% of the equity of the PBS Coals Group of Companies, a privately held group of companies engaged in the mining, processing and sale of primarily metallurgical coal from their properties in West-Central Pennsylvania (the "PBS Group"). The PBS Group consists of PBS Coals, Inc., a Delaware corporation, and Rox Coal, Inc., a Pennsylvania corporation, and their subsidiaries and holding companies. The PBS Group currently produces approximately 3 million clean tons of bituminous coal a year from both its underground and surface operations. The PBS Group has six surface and six underground mines in operation, and controls 153.3 million tons of measured and indicated coal resources with an additional 98.3 million tons of contingent resources. The PBS Group has initiated a mine expansion program to increase production to 5 million clean tons per year over the next two fiscal years (consisting primarily of metallurgical coal) and to complete construction of its Cambria processing facility.

Forward-Looking Statements

Certain information set forth in this press release contains "forward-looking statements", and "forward-looking information under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management's assessment of PBS' future plans and operations and are based on PBS' current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause PBS' actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: liabilities inherent in coal mine development and production; geological, mining and processing technical problems; PBS' inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and coal processing operations; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; changes in the regulations in respect to the use of coal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labor stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. PBS undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

The securities described in this press release have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person absent an available exemption from the registration requirements of such Act.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • PBS Coals Corporation
    Robert Scott
    President and Chief Executive Officer
    (814) 443-4668