Alpha Natural: First Priority With Cash Is Expanding Company

Coal company Alpha Natural Resources Inc. (ANR) said Wednesday it's interested in acquisition opportunities throughout the U.S. and aboard amid strong cash reserves.

Company executives during a conference call with analysts said prices for assets have come down, making it a favorable market. Several of the U.S.'s largest coal companies have made similar comments, seeing growing opportunities for mergers and acquisitions amid a slide in coal prices and slump in demand.

Alpha Natural sees the best opportunities for cost-savings deals near its operation in the Eastern U.S., but sees benefits longer term in expanding its geographic footprint.

If the company is unable to settle on opportunities as the year goes on, executives said they would consider other options, including buying back shares or paying down debt.

Analysts see Alpha Natural becoming involved in merger and acquisition activity as it boasts a strong liquidity position. The company said Wednesday at the end of the quarter it had $693 million in cash and cash equivalents and $521 million in long-term debt.

At the same time, Alpha Natural said it continues to cut costs amid weak market conditions. It has cut overtime, furloughed workers and will extend the Independence Day holiday at select mines. It also is working to recoup the value of sale contracts for coal used in steel production, taking legal steps and turning to arbitration.

Alpha Natural posted a bigger-than-expected 60% jump in first-quarter profit Wednesday on wider margins and lower costs.

Shares of the company recently traded up 16% to $29.30.

-By Mark Peters, Dow Jones Newswires; 201-938-4604; [e-mail]