FOR IMMEDIATE RELEASE
July 22, 1996
Zeigler Lauds New Agreements With Carolina Power & Light
Fairview Heights, Ill., July 22, 1996 Chand B. Vyas,
President and Chief Executive Officer of Zeigler Coal Holding Company (NYSE:
ZEI) announced today that Zeigler subsidiaries had forged comprehensive new
coal supply agreements with Carolina Power & Light Company (CP&L) for
coal supplies relating to the company's Marrowbone Development Company.
"I have previously stated that Zeigler's growth will come through
two primary strategies: by more greatly aligning ourselves with customers, and
by accessing key links along economic value chains," said Vyas. "Our
new agreements with CP&L greatly advances our first strategy and provides an
opportunity to work together on the second strategy. And, in addition to
strategic improvements, we foresee the potential to improve revenues, earnings
and cash flows as a result of the new agreement."
According to CP&L Senior Vice President of Power Operations James
M. Davis, Jr., "We are pleased with the innovative, proactive manner in
which Zeigler approached this effort, and with the resulting agreements. We
consider Zeigler to be an excellent supplier, and we look forward to enhancing
our business relationship with them. This is an example of how a coal company
and utility can work together in the face of a rapidly changing utility
environment."
Said Vyas, "Earlier, we approached CP&L regarding our
Marrowbone contract. Our objective was to better align ourselves with CP&L
and strengthen our long-standing position as a preferred supplier. We sought to
improve their competitive position, enhance the flexibility and value of the
contract to us and build a basis upon which we could extend our business
relationship. These were admittedly lofty objectives and yet I am pleased to
report that as a result of excellent work by CP&L and Zeigler teams the
agreements accomplish all of these."
The revised and restated
Marrowbone agreement and a new agreement resulting from the discussions with CP&L
is responsible for more than 10% of Zeigler revenues. Both the prior and new
agreements run through 2006. Major new elements of the agreements include:
- Pricing that will allow CP&L to sell more power while letting Zeigler
sell more coal and improve the value of its business with CP&L;
- Sourcing flexibility for coal shipments;
- A problem-solving mechanism to resolve quality variations so as to greatly
reduce the likelihood of disputes; and
- Agreement to jointly pursue additional value-adding business opportunities.
The Zeigler family of companies is among the largest coal producers
and marketers in the United States, and controls more than 1.3 billion tons of
economically recoverable coal reserves, including 1 billion tons of low sulfur
coal. The Zeigler family of companies currently operates underground and
surface coal mining complexes in Illinois, Kentucky, Ohio, West Virginia and
Wyoming. In addition, the company owns and operates two East Coast transloading
terminals, a land company and a clean coal technology corporation.
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