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P 0.0 Pa5AL fOR YME MONTANA POWER COAL aVSINQSS Opioa B. WCC would acquire Basin and its liabilities at a negative value of $9.20 niillitin, which includes assumptions for continued litigation.and contingency costs. "the Company would cooperate with WCC iti:connectioriwith any continued litigation. _:_r._._..._.... SynCoal Option. WCC currentlyholds.a.substantial amount of Net Operating Loss ("1`lOL") tax credits, such thst we place a miuunal value on the SynCoal NOLs and Section 29 tax credits. We would therefore be open to any structure whereby the Company would retain a IIuLUlcial iutencst in SynCoal and continue to receive the benefit of the tax credit stream. This Proposal, however, assumes that WCC would acquire SynCual with no further relationship with the Company. 338(h (10) Option. Due to WCC's tax position (holding a substantial amount of NOLs~, we would be willing to forego the benefit of the Section 33$(hx10) election, which is provided for in the draft Stock Purchase Agreement, if the Cost of such as election is a significant consideration for the Company. Tax Advantaged Option. We have aiso included a tax advantaged transaction option for the Company's consideration. We believe that a leveraged limited partnership structure could etiable the Company to defer all or significantly all of the capital gains tax liability that would be created by WCC's cash transaction Proposal. We have provided ati overview of the potential bcneIIu such a transaction could provide to the Company in the "Tax Advantaged Alternative" presentation attached hereto as Attachment i. The potential brnefits crealed by the Tax Advantage Option as proposed herein could result is the Company's aChielsing an additional 30 million ur [I[we iu pre-tax value. B. Draft Sluck PurcLase Aerccmont. WCC has attached our mark-up to the drag Stock purchase Agreement provided to us by Goldman, Sax:lla & Cu. (Attacluucnt 2). We arc prepared to work with the Company to draft a mutually satisfactory Stock Ptuclrase Agreement, incorporating the elements identified in our mark-up. C. Pinancina. WCC, a publicly traded entity (AMEX:WLB), intends to fitnd this acquisition from a combuiation of equity and debt. 1'NC Capital Markets, the market leader in coal industry financing, and N.M. Rothschild & Sons, a premier Honing industry corporate finance house, arc working with WCC to structure the senior debt required to complete the acquisition. The highly accelerated schedule for submission ofbids prevents these lenders from providing binding commitment letters at this time. We are conSdent such comtitment$ will be provided within a reasonable time following notification by the Q!]251 W EETMOREI,ANO COAL CO. ANO THE NORTH AM F0.1 CaN COAL CARP 00.A710N L0 3~Jdd W(lldl WIP 65L09b86SL 55~bL L00L/9t/80