Teams With Management Group to Purchase Non-Core Subsidiary
of United States Steel Corporation
MI (May 28, 2003) Questor Management Company, LLC and Benjamin
M. Statler, LLC announced today that PinnOak Resources, LLC, a
new company formed by Statler and by Questor Partners Fund II,
L.P. and other funds managed by Questor Management Company, has
signed a definitive agreement to acquire from United States Steel
Corporation and its affiliates two underground coal mines and
related assets. Terms of the transaction were not disclosed.
The mining operations that are the subject of the transaction
are those associated with the Pinnacle No. 50 Mine complex located
near Pineville, West Virginia, and the Oak Grove Mine complex
located outside Birmingham, Alabama. Most of the coal produced
by the mines is purchased by U. S. Steel and third-party customers
for use in the coke and steel-making process. A portion
of the coal is sold to the electric utility industry. At
the closing of the transaction, U. S. Steel will enter into a
multi-year supply agreement under which U. S. Steel is expected
to purchase a significant portion of the annual production output
of the two mines.
"We are delighted that Ben Statler approached us to partner
with him in his bid to acquire these coal properties from U. S.
Steel," said Michael D. Madden, the principal of Questor
Management Company who was involved in the transaction.
"Questor's experience in turning non-core units of larger
companies into successful stand-alone businesses makes this a
natural transaction for us. Both U. S. Steel and Questor
recognize that Ben Statler's prior success as a senior operating
executive in the coal industry assures the smooth separation of
these mines from U. S. Steel and enhances their long-term viability
as commercial enterprises. Questor also recognizes that
the mines, having operated as a non-core subsidiary of a much
larger company, must reduce costs and operate more efficiently
in the future in order to justify the substantial capital expenditures
required to extend the life of the operations."
Benjamin Statler, President and Chief Executive Officer of PinnOak
Resources, said, "We have assembled a great management team
and we look forward to working with the present employees at the
mines to create a successful company focused on coal. Together
we will build a company committed to the objective of mining coal
safely, efficiently and at a competitive price. Our success
will create the opportunity for PinnOak Resources to grow and
The closing of the transaction, which is subject to financing
and other customary conditions, is expected in late June.
Questor Management Company, LLC, based in Southfield, Michigan,
manages the Questor Partners Funds, which have $1.1 billion of
committed equity capital. The Funds' objective is to acquire
significant positions in companies that are underperforming or
have not met their owners' expectations, but offer the potential
for superior returns with the application of appropriate levels
of capital and management expertise.