-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WIthk7T6GYzpguCJdHpV6sf2rEYwHAc4Yxvs+AMUCkE3TjcJTbVhtpHXBbF0jsIc 8RKta5DjmTWdYqqS0GlyXA== 0000902664-05-001853.txt : 20050916 0000902664-05-001853.hdr.sgml : 20050916 20050916094853 ACCESSION NUMBER: 0000902664-05-001853 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050916 DATE AS OF CHANGE: 20050916 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JANA PARTNERS LLC CENTRAL INDEX KEY: 0001159159 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: JANA PARTNERS LLC STREET 2: 536 PACIFIC AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94133 BUSINESS PHONE: 2125935955 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MASSEY ENERGY CO CENTRAL INDEX KEY: 0000037748 STANDARD INDUSTRIAL CLASSIFICATION: BITUMINOUS COAL & LIGNITE SURFACE MINING [1221] IRS NUMBER: 950740960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-30745 FILM NUMBER: 051087886 BUSINESS ADDRESS: STREET 1: 4 NORTH 4TH STREET CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 9493492000 MAIL ADDRESS: STREET 1: 4 NORTH 4TH STREET CITY: RICHMOND STATE: VA ZIP: 23219 FORMER COMPANY: FORMER CONFORMED NAME: FLUOR CORP/DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FLUOR CORP LTD DATE OF NAME CHANGE: 19710624 SC 13D 1 sc13d.txt MASSEY ENERGY COMPANY SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- SCHEDULE 13D* (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Massey Energy Company - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.625 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 576206106 - -------------------------------------------------------------------------------- (CUSIP Number) Marc Weingarten, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 7, 2005 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 10 Pages) - ------------------------- * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 2 OF 10 PAGES - --------------------------- --------------------------- - ----------- -------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) JANA PARTNERS LLC - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ----------- -------------------------------------------------------------------- 7 SOLE VOTING POWER 5,002,800 (see Item 5) --------- ------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY --------- ------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 5,002,800 (see Item 5) --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER -0- - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 5,002,800 (see Item 5) - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.5% (see Item 5) - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 3 OF 10 PAGES - --------------------------- --------------------------- ITEM 1. SECURITY AND ISSUER. This statement on Schedule 13D relates to the shares ("Shares") of common stock, $0.625 par value, of Massey Energy Company (the "Issuer"). The principal executive office of the Issuer is located at 4 North 4th Street, Richmond, Virginia 23219. ITEM 2. IDENTITY AND BACKGROUND. (a) This statement is filed by JANA Partners LLC, a Delaware limited liability company (the "Reporting Person"). The Reporting Person is a private money management firm which holds the Shares of the Issuer in various accounts under its management and control. The principals of the Reporting Person are Barry Rosenstein and Gary Claar (the "Principals"). (b) The principal business address of the Reporting Person and the Principals is 201 Post Street, Suite 1000, San Francisco, California 94108. (c) The principal business of the Reporting Person and the Principals is investing for accounts under their management. (d) Neither the Reporting Person nor the Principals has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Neither the Reporting Person nor the Principals has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 4 OF 10 PAGES - --------------------------- --------------------------- (f) The Reporting Person is a limited liability company organized in Delaware. The Principals are citizens of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. As of the date of this filing, the Reporting Person may be deemed the beneficial owner of (i) 4,832,800 Shares outright and (ii) 170,000 Shares issuable upon the exercise of call options (the "Options") with an exercise price of $55.00 per Share. The aggregate purchase price of the 4,832,800 Shares owned beneficially by the Reporting Person is $225,932,054. The exercise price of the Options is $55.00. Such Shares were acquired with investment funds in accounts under management. ITEM 4. PURPOSE OF TRANSACTION. On September 7, 2005, the Reporting Person's beneficial ownership first exceeded 5% of the Issuer's outstanding Shares. The Reporting Person acquired the Shares for investment in the ordinary course of business. The Reporting Person believes that the Shares at current market prices are undervalued and represent an attractive investment opportunity. In certain instances representatives of the Reporting Person will engage in discussions with the management of companies in which it has invested concerning the business and operations of the company and/or approaches to maximizing shareholder value. On September 14, 2005, the Reporting Person discussed with representatives of the Issuer, including Donald Blankenship, the Chairman, President and CEO of the Issuer, the Reporting Person's belief that the Issuer could unlock significant value for shareholders through a prompt repurchase of its common stock. Such representatives of the Company stated that they would consider taking such action. Therefore, following this discussion, the Reporting Person sent a letter to Mr. Blankenship outlining the benefits of a prompt share repurchase and stating its belief that the Issuer should undertake such action. A copy of the letter is attached hereto as Exhibit A. Neither the Reporting Person nor the Principals has any present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein. The Reporting Person intends to review its investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer's financial position and strategic direction, price levels of the Shares, conditions in the securities market and general economic and industry conditions, the Reporting Person may in the future take such actions with respect to its investment in the Issuer as it deems appropriate including, without limitation, purchasing additional Shares or selling some or all of its Shares, pursuing alone or with others further discussions with the Issuer, other stockholders and third parties, seeking Board representation and/or otherwise changing its intention with respect to any and all matters referred to in Item 4. - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 5 OF 10 PAGES - --------------------------- --------------------------- ITEM 5. INTEREST IN SECURITIES OF THE COMPANY. (a) The aggregate percentage of Shares reported to be beneficially owned by the Reporting Person is based upon 76,864,617 Shares outstanding, which is the total number of Shares outstanding as reported in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005. As of the close of business on September 15, 2005, the Reporting Person may be deemed to beneficially own 5,002,800 Shares, as described in section (b) below, constituting approximately 6.5% of the Shares outstanding. (b) As of the date of this filing, the Reporting Person may be deemed the beneficial owner of (i) 4,832,800 Shares outright and (ii) 170,000 Shares issuable upon the exercise of the Options. The aggregate purchase price of the 4,832,800 Shares owned beneficially by the Reporting Person is $225,932,054. The exercise price of the Options is $55.00. The Reporting Person has sole voting and dispositive powers over the 5,002,800 Shares reported herein (assuming exercise of the Options), which powers are exercised by the Principals. (c) Information concerning transactions in the Shares effected by the Reporting Persons during the past sixty days is set forth in Schedule A hereto and is incorporated herein by reference. All of the transactions in Shares listed on Schedule A hereto were effected in open market purchases on the NYSE through various brokerage entities. The Options were also purchased on the open market. (d) No person (other than the Reporting Person) is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE COMPANY. - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 6 OF 10 PAGES - --------------------------- --------------------------- Except as otherwise set forth herein, the Reporting Person does not have any contract, arrangement, understanding or relationship with any person with respect to securities of the Company. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit A - Letter to Donald Blankenship, Chairman and CEO of the Issuer, dated September 15, 2005 from the Reporting Person. - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 7 OF 10 PAGES - --------------------------- --------------------------- SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: September 15, 2005 JANA PARTNERS LLC By: /s/ Barry Rosenstein ------------------------- Name: Barry Rosenstein Title: Managing Partner By: /s/ Gary Claar ------------------------- Name: Gary Claar Title: Managing Director - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 8 OF 10 PAGES - --------------------------- --------------------------- SCHEDULE A TRANSACTIONS IN THE SHARES BY THE REPORTING PERSON DURING THE PAST 60 DAYS Date of Transaction Shares Purchased (Sold) Price per Share ($) - -------------------------------------------------------------------------------- 7/27/2005 (25,389) (43.9234) 7/27/2005 (2,511) (43.9234) 7/28/2005 (111,111) (44.2758) 7/28/2005 (68,250) (44.2758) 7/28/2005 (10,989) (44.2758) 7/28/2005 (6,750) (44.2758) 8/1/2005 341,250 44.6725 8/1/2005 182 44.6250 8/1/2005 22,750 43.9028 8/1/2005 2,250 43.9028 8/1/2005 33,750 44.6725 8/1/2005 18 44.6250 8/2/2005 45,500 45.1000 8/2/2005 455,000 45.4989 8/2/2005 4,500 45.1000 8/2/2005 45,000 45.4989 8/3/2005 250,250 45.8373 8/3/2005 98,189 45.8800 8/3/2005 334,971 45.8471 8/3/2005 24,750 45.8373 8/3/2005 9,711 45.8800 8/3/2005 33,129 45.8471 8/4/2005 182,000 45.0945 8/4/2005 159,250 45.1357 - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 9 OF 10 PAGES - --------------------------- --------------------------- 8/4/2005 34,580 45.0943 8/4/2005 18,000 45.0945 8/4/2005 15,750 45.1357 8/4/2005 3,420 45.0943 8/5/2005 77,350 44.8180 8/5/2005 91 44.5375 8/5/2005 7,650 44.8180 8/5/2005 9 44.5378 8/8/2005 637 46.1800 8/8/2005 63 46.1800 8/9/2005 39,494 46.0333 8/9/2005 210,847 46.1326 8/9/2005 182,000 46.2163 8/9/2005 22,750 46.1206 8/9/2005 3,906 46.0333 8/9/2005 20,853 46.1326 8/9/2005 18,000 46.2163 8/9/2005 2,250 46.1206 8/11/2005 91,000 47.9367 8/11/2005 9,000 47.9367 8/15/2005 91,000 48.4032 8/15/2005 9,000 48.4032 8/16/2005 273,000 47.5424 8/16/2005 22,750 47.6550 8/16/2005 27,000 47.5424 8/16/2005 2,250 47.6550 8/17/2005 330,239 47.1016 8/17/2005 193,011 47.8650 - --------------------------- --------------------------- CUSIP NO. 576206106 SCHEDULE 13D PAGE 10 OF 10 PAGES - --------------------------- --------------------------- 8/17/2005 32,661 47.1016 8/17/2005 19,089 47.8650 8/24/2005 19,000 47.7000 8/24/2005 (9,000) (47.6780) 8/24/2005 (9,000) (47.6780) 8/24/2005 (1,000) (47.6780) 9/7/2005 275,400 48.9336 9/7/2005 82,712 48.9630 9/7/2005 22,950 48.9350 9/7/2005 91,800 48.8850 9/7/2005 211,140 48.9593 9/7/2005 24,600 48.9336 9/7/2005 7,388 48.9630 9/7/2005 2,050 48.9350 9/7/2005 8,200 48.8850 9/7/2005 18,860 48.9593 9/8/2005 183,600 49.7127 9/8/2005 91,800 49.6125 9/8/2005 16,400 49.7127 9/8/2005 8,200 49.6125 9/12/2005 (12,400) (50.2770) 9/14/2005 Options to purchase 55.0000 (exercise 170,000 Shares price of options) EX-99 2 exha.txt EXHIBIT A [LOGO OMITTED] September 15, 2005 Donald Blankenship Chairman/President/CEO Massey Energy Company 4 North 4th Street Richmond, VA 23219 VIA FACSIMILE AND OVERNIGHT DELIVERY Dear Mr. Blankenship, JANA Partners LLC ("we" or "us") beneficially owns 6.5% of Massey Energy Company ("Massey" or the "Company"). We are writing to thank you for taking the time to speak with us yesterday and to provide you with a summary of the analysis we shared with you (updated for the current stock price). As we discussed, we believe that the Company can and should unlock significant value through a meaningful share repurchase and believe that the time is now for Massey to take this step for its shareholders. We trust that you and the other members of the Company's Board of Directors (the "Board") will give prompt consideration to the following analysis which has led us to this conclusion. We start with the assumption that the Company assumes additional debt of $1.5 billion to repurchase its shares in a Dutch tender offer. Assuming a tender offer at a 10% premium to the recent share price of approximately $51, we believe Massey could purchase almost 27 million shares utilizing an additional $1.5 billion in debt, which would be instantly accretive to 2007 EPS by over 20% (assuming 89.3 million shares currently outstanding on a fully diluted basis). The actual benefit to shareholders however should be even more than first meets the eye. Assuming a target price based on a 10x multiple of 2007 earnings (which actually represents a discount to valuations for comparable companies), we believe Massey's stock could reach the $80 per share range, which would be almost 60% higher than the current price.(1) We believe this $1.40 difference in pre- vs. post-buyback EPS can clearly make a significant difference to the Company's share price when using a 10x earnings multiple - adding $14 per share of value. - ------------------------ (1) Based upon $8.00 per share earnings, pro forma for the share buyback. Prior to the share buyback we estimate fully diluted 2007 EPS to be $6.60 per share. 1 Furthermore, we believe any steps taken to put the appropriate capitalization into place today will be very well rewarded by the equity market. Not only is a Dutch tender highly accretive to EPS, it also would send a powerful signal to the market about the confidence that management and the board have in the Company and it would highlight their intent to take bold steps to maximize shareholder value. This should also help close the gap between Massey's discounted valuation relative to comparable public coal companies that have seen their share prices increase significantly more than Massey's year to date. We also believe the Company would be able to de-lever very quickly in light of the significant cash that will be generated over the next couple of years with the expected ramp in EBITDA. Given the good visibility the Company will have into revenues due to the ever-increasing percentage of forward tonnage being contracted at favorable prices, we believe this amount of leverage to be appropriate. Indeed, we believe that you acknowledged on our phone call that debt service of this level of debt would "not be a problem". We also believe that the free cash flow that Massey will generate in the next few years will lead to good credit metrics in the near-term. Using our assumption of $1.5 billion of additional debt, by the end of 2007 the Company's balance sheet will be under-levered again at under 1.0x net debt to EBITDA. Further, we believe that the $1.5 billion of incremental debt is reasonable given that we have excluded from our analysis the $307 million of 'in-the-money' convertible debt; therefore, conceptually a $1.5 billion share purchase would only represent a debt increase of $1.2 billion. We are aware that the Company has some internal growth initiatives which may have attractive return profiles. However, we do not believe that the pursuit of those opportunities and the implementation of a share buyback of this scale are mutually exclusive. In fact, the Company should continue to have the ability to fund its internal growth opportunities and we would support these efforts following a buyback. With respect to timing, we believe that a share repurchase as we have described here should be consummated promptly and that the Company should not delay in order to accumulate additional cash. The economics of a buyback diminish as the stock creeps higher, so buying an undervalued stock today for a lot less than the Company might be able to in the future is highly preferable to waiting and also goes much farther in creating long-term shareholder value. By the time Massey has enough cash to do a meaningful buyback (starting perhaps sometime in 2006) investors will likely be looking at 2007 earnings to value the stock, meaning the stock could likely be appreciably higher than it is today. We also do not believe that a buyback should be spread out over time. All too often, "time to time" buybacks result in too few shares being bought back especially as the price creeps higher. In contrast, a Dutch tender enables a company to have control over the price and number of shares repurchased as opposed to open market purchases. As the saying goes, "timing is everything". Although some companies initially express skepticism with the Dutch tender strategy, in our experience no one regrets implementing it after their stock sees the benefit. A Dutch tender represents a long-term solution to narrowing a valuation 2 disparity and providing enhanced shareholder returns by permanently reducing the denominator in all per share calculations. A recent, and we believe highly instructive, example is the Dutch tender offer conducted by Kerr-McGee Corp. ("Kerr-McGee") which we and others urged the company to undertake. Kerr-McGee was in a similar situation to Massey in that the market did not recognize the company's true asset value, and the company was able to capitalize on this situation through a significant stock buyback. Despite initial concerns, Kerr-McGee ultimately undertook a significant share repurchase and saw its stock rise from around $60 at the beginning of the year to over $90 today. We encourage you to discuss the benefits of a significant share buyback with Luke R. Corbett, the Chairman and CEO of Kerr-McGee, whom we believe deserves a great deal of credit for this bold and successful step. We would be more than happy to discuss the merits of doing a Dutch tender with the other members of the Board to help them understand the shareholder value that we believe would be generated by taking the aforementioned steps. Based upon informal conversations we have had with some of the larger shareholders of Massey, we believe a majority of Massey shareholders would be highly supportive of such a value-creating strategy. Please let us know if we can be of service in any of these regards. Sincerely, Barry Rosenstein JANA Partners LLC Managing Partner BR/AR/CP 3 -----END PRIVACY-ENHANCED MESSAGE-----