A trial court judge has ruled that International Coal Group broke a coal supply agreement with Allegheny Energy Supply and Monongahela Power and could owe the two companies $104 million, ICG said Tuesday.
ICG, which on Monday said it reached a deal with Arch Coal to be acquired by Arch in an all-cash transaction valued at $3.4 billion, said it received the court ruling Monday afternoon. The company does not expect the court's ruling to adversely affect the completion of the Arch acquisition, ICG said in a statement.
ICG said the trial court judge ruled that ICG's Wolf Run subsidiary breached its coal supply agreement with Allegheny and is liable for past and future damages and interest in the total amount of $104,103,893.
Allegheny, the sole customer of coal produced at Wolf Run's Sycamore Number 2 mine, filed a lawsuit in 2006 claiming that Wolf Run breached a coal supply contract when it declared force majeure upon temporarily idling the mine in the third quarter of 2006. Allegheny also claimed that Wolf Run continued to breach the contract by failing to ship volumes after that period.
Allegheny Energy Supply and Monongahela Power are subsidiaries of Allegheny Energy, which in February completed a merger with FirstEnergy.
"We are disappointed in the court's ruling" and "believe that the court misinterpreted both the factual underpinnings of the case as well as the applicable law," said Roger Nicholson, senior vice president and general counsel at IGC. "We intend to avail ourselves of post-verdict remedies and to appeal the ruling, if necessary," he said.
In the event of an appeal, IGC believes it has sufficient cash on hand and credit capacity to post any necessary appeal bond.
