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08-03-2010
Press Release : Essar Group and Denham Capital announce a purchase-sale agreement for Trinity Coal for US $600 million

MUMBAI and BOSTON, March 06, 2010 – Essar Group through its subsidiary Essar Minerals, Delaware (“Essar”), and Denham Capital (“Denham”), an energy- and commodities-focused global private equity firm, announced today a definitive agreement by which Denham will sell its ownership of Trinity Coal Partners LLC (“Trinity”) to Essar for US $600 million.  Trinity is a leading U.S. coal producer with operations in the Central Appalachian region.  The deal is subject to relevant approvals and is expected to close by the end of the month. 

 
As one of the top 10 U.S. coal producers, Trinity owns and operates mines in Kentucky and West Virginia , and has a proven resource base of approximately 200 million tons of coal – split equally between metallurgical coal and steam coal.  It currently produces approximately 7 million tons of coal annually and plans to ramp up production to 10 million tons per year.
 
Commenting on the deal, Prashant Ruia, Essar Group Chief Executive, said: “Trinity Coal will be an excellent addition to our North American business, ensuring that we become an integrated player in the region. Access to Trinity’s vast coal reserves and the opportunity to work with a team of skilled personnel will take us closer to our vision of becoming one of the lowest cost steel producers in the world. I look forward to welcoming the people of Trinity Coal to the Essar family.”
 
Carl Tricoli, Managing Partner of Denham Capital, said: “Our investment tenure in Trinity illustrates Denham’s ability to create value from the assets in which we invest. Trinity and Essar are well-suited to work together to meet the production needs of Essar’s facilities.”
 
“Over the last five years, our partnership with Denham has strengthened our management team and enhanced operational quality to drive value across the organization,” said Ken Woodring, CEO of Trinity. “In this new era of our firm, we are excited to become a leading provider of resources to Essar as it increases production to meet demand for its expanding customer base.”
 
The transaction is part of Essar’s strategy to continue to achieve backward integration and to secure raw material needs for its global steel and power operations. Essar’s steelmaking capacity of 14 million tonnes is spread across plants in Canada , India and Indonesia . It also owns iron ore reserves of over 1.4 billion tonnes in Minnesota , Minn.   Additionally, the Group is scaling up its power generation capacity in India to 6,000 megawatts (MW).
 
Denham acquired Trinity in January 2005 and during its ownership, Trinity more than doubled reserves as well as increased productive capacity from approximately 1.7 million tons per year to 9 million tons per year.
 
Trinity operates six mining complexes with a total of 10 surface mines, three underground mines and six highwall miner units in the Central Appalachian coal basin. The firm is based in Scott Depot, W. Va. and employs approximately 650 employees.
 
About Trinity Coal:
 
Trinity is a growth-oriented U.S. coal producer in the Central Appalachian coal basin, operating a variety of surface and underground mines in southern West Virginia and eastern Kentucky . Trinity sells both steam and metallurgical coal to electric utilities, steel manufacturers, coal brokers, and other buyers primarily in the eastern United States .
 
About Essar Group:
 
The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Energy, Power, Communications, Shipping Ports & Logistics, Construction, and Mining & Minerals. With operations in more than 20 countries across five continents, the Group employs 60,000 people, with revenues of USD $15 billion. For more information, visit www.essar.com.
 
About Denham Capital:
 
Denham Capital is a leading global private equity firm, with offices in Boston , Houston , Short Hills , New Jersey and London .  With approximately $4.3 billion of invested and committed capital, Denham makes direct investments in all segments of the energy and commodities value chain, including oil and gas, mining, timber, power, carbon assets and energy-related infrastructure and services. The firm invests globally, with investments currently in the US, Canada, South America, Europe, Russia/CIS, Asia and Australia, and across all parts of the capital structure and all stages of the corporate and asset lifecycle, from development projects to mature, operating businesses. Denham typically targets investments in the $50 million to $250 million range.  For more information about Denham Capital, visit www.denhamcapital.com. Denham Capital does not provide investment advisory services to the public. Denham Capital Management “SM” is a trademark of Denham Capital Management LP.
 
 
 
Media Contacts:
 
Denham Capital
Gina Sorice –CJP Communications
Phone: (212) 279-3115 ext 243, email: gsorice@cjpcom.com
 
Essar Group
Manish Kedia, Sr. VP – Corporate Affairs, Essar Group,
Phone: +91 98197 30092, Email:
manish.kedia@essar.com
 
B. Ganesh Pai, GM – Corporate  Communications, Essar Group,
Phone: +91 98197 30225, Email: ganesh.pai@essar.com   
 
 
Essar Backgrounder
The Essar Group is a multinational organization that has operations across five continents.
Essar’s revenues are over USD 15 billion and it has 60,000 employees spread across over 150 offices in more than 20 countries.
Essar is among the top five Indian companies in all its core business verticals of Steel, Energy, Power, Communications, Shipping Ports & Logistics, Construction, and Mining & Minerals.
 
Essar has formidable size and scale in all our core verticals:
•           Steel: A global steel producer with 14 million tonnes per annum of current capacity, aiming to achieve a global capacity of 20-25 million tonnes
•           Energy: An integrated oil & gas company, with 70,000 km of exploration and production assets worldwide, over 290,000 bpd of global refining capacity and a chain of 1,300 oil retail outlets in India
•           Power: A ccurrent generation capacity of 1,200 MW that will be expanded to 6,000 MW by 2012. The goal is to reach 11,000 MW in the near future
•           Communication (Telecoms): A global player in the communications sector with presence in telecom services (over 90 million subscribers), telecom retail (over 1,300 branded telecom retail outlets) and business process outsourcing (40,000 people working from 40 global delivery centres in 9 countries)
•           Shipping Ports & Logistics: A comprehensive sea logistics company with presence in sea transportation, ports & terminals (building 150 million tonnes cargo handling capacity), logistics and oilfields services
•           Projects: The world-class Engineering, Procurement and Construction (EPC) capabilities that we leverage to not only run large-scale industrial projects but also build them from the grounds up. Over the last four decades, our Projects Business Group has built all our industrial assets in India in the businesses of steel, oil & gas, power, telecom towers, and ports & terminals
•           Mining & Minerals: We own a growing portfolio of iron ore and coal mines in Asia, Africa, Latin America and North America
 
Essar’s long-term business strategy is to ensure that its operations have proximity to global markets. It is also focusing on backward integration and securing access to raw material sources in geographies where it has operations. In the last 2-3 years, the Group has acquired a steel plant in Canada, a controlling stake in an oil refinery in Kenya, oil & gas production blocks in Nigeria, Madagascar, Indonesia and Australia, as well as coal and iron ore mines in the Americas, Asia and Africa.
In recent years, Essar has adopted a multi-pronged strategy to drive growth across its many business verticals:
•           Made inroads into new global markets using its experience of being a leading player in the Indian market. This also entailed setting up operations in its target markets, like the US and Africa
•           Acquired global assets to be close to raw material sources or, as in the case of its business process outsourcing company, valuable people assets
•           Worked towards creating synergy across its various businesses – so that cost in one business was captured as revenue in another business
•           Drove end-to-end integration to capture the complete value chain in all businesses
•           Strived more diligently to optimize costs and adopt increased automation using the latest technology
•           Acquired assets with a long-term vision rather than an immediate goal
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