1993-10-05_GENERAL DOCUMENTS - C1981017 (3)

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would fill- up with water and methane gas. Additionally, frequent inspection of Mine supports was required to ensure the stability of underground Mine facilities. Failure to pump, ventilate and inspect the Mine would result in irreparable damage to the Mine and would prevent any successor operator from economically operating the Mine. Mothballing the Mine also maintaining Mine equipment and continuing monthly payments on certain mineral leases, equipment leases, and contracts. This program cost approximately $200, 000 per month.- Most of the cost of this program was funded through advances from Sanwa. All sales negotiations were premised on sale of the Mine to a new operator. Therefore, "mothballing" the Mine was essential to maintain the Mine in an operable condition. The marketing program was conducted by the Mergers and Acquisitions Division of Arthur Andersen & Co. in New York City. Beginning in March 1991, more than two hundred potential purchasers were contacted regarding a possible sale of the Mine, including domestic and foreign mining companies, domestic and foreign steel producers, and financial investor groups with a possible interest in such an acquisition. In addition, public announcements regarding the sale of the Mine appeared in trade publications such as "Coal Outlook" and "The National Review of Corporate Acquisitions. " Of the potential purchasers contacted, 91 companies requested copies of a Confidential Information Memorandum prepared by the Debtor which described the Mine, the costs of operating the Mine, the market for the coal production, and other topics of interest to potential purchasers. Price terms were not specified but instead were to be reached through a competitive bidding process. After review of the confidential memorandum, two companies expressed interest in further investigating a possible purchase of the Mine. These companies met with management of the Debtor and toured the facilities. In August 1991, these companies submitted bids to purchase the Mine. The Debtor accepted a $6,000, 000 cash offer from one of the companies, A.T. Massey Coal Company ( "Massey" ) , a coal company located in West Virginia. However, the bid was subject to final approval by the Board of Directors of Massey's parent corporation, Fluor Company, which disapproved the transaction in November 1991. Negotiations with Massey then terminated. The Debtor then resumed negotiations with the other company which had submitted a bid in August, but that company had financing contingencies which could not be satisfied. In August 1991, Sanwa declared its loan in default and suspended further advances. Mid-Continent Minerals, Inc. financed Cs\WP51\JBS\MIDCON\DISCLOS.STM October 6, 1993 7