Drummond Company, Inc. Commences Cash Tender Offers and Related Consent Solicitations for Outstanding Senior Notes due 2014 and Senior Notes due 2016

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Drummond Company, Inc. (the “Company”), announced today that it is commencing cash tender offers (each an “Offer” and together, the “Offers”) for (i) any and all of its outstanding 9% Senior Notes due 2014 (CUSIP/ISIN Nos. 262277AC0/US262277AC08 and U2644RAB1/USU2644RAB16) (the “2014 Notes”) and (ii) any and all of its outstanding 7.375% Senior Notes due 2016 (CUSIP/ISIN No. 262277AB2/US262277AB25) (the “2016 Notes” and collectively with the 2014 Notes, the “Notes”) , upon the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement, dated the date hereof (as it may be amended or supplemented from time to time, the “Statement”), and in the related Letter of Transmittal and Consent (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, collectively with the Statement, the “Offer Documents”). In connection with the Offers, and on the terms and subject to the conditions set forth in the Offer Documents, the Company is soliciting consents (with respect to each series of Notes, a “Consent Solicitation and collectively, the “Consent Solicitations”) of holders of Notes to authorize the elimination of most of the restrictive covenants and certain of the events of default contained in (i) the indenture governing the 2014 Notes (the “2014 Proposed Amendments) and (ii) the indenture governing the 2016 Notes (the “2016 Proposed Amendments” and collectively with the 2014 Proposed Amendments, the “Proposed Amendments”). Holders may not tender their Notes without delivering their consents to the applicable Proposed Amendments and may not deliver consents to the Proposed Amendments without tendering their related Notes. The Company is seeking consents to each of the 2014 Proposed Amendments and the 2016 Proposed Amendments, respectively, as a single proposal. Accordingly, any consent purporting to consent to the Proposed Amendments only in part will be deemed a valid delivery of consent to all of the Proposed Amendments with respect to such series of Notes.

The consent payment deadline with respect to each series of Notes is 5:00 p.m., New York City time, on October 17, 2011 (such time and date, as it may be extended with respect to a series of Notes, the “Consent Payment Deadline”), and the tender offer with respect to each series of Notes will expire at 12:00 midnight, New York City time, on October 31, 2011 (such time and date, as it may be extended with respect to a series of Notes, the “Expiration Time”), in each case, unless earlier terminated by the Company. Notes tendered may be withdrawn at any time at or before 5:00 p.m., New York City time, on October 17, 2011 (such time and date, as it may be extended with respect to a series of Notes, the “Withdrawal Deadline”) but not thereafter, except as required by law. The Company may extend the Consent Payment Deadline with respect to a series of Notes without extending the related Withdrawal Deadline.

The table below summarizes certain payment terms of the Offers and the Consent Solicitations:

CUSIP/ISIN Nos.	Outstanding Principal Amount of Notes	Description of Notes	Total Consideration*	Consent Payment*	Tender Offer Consideration*
262277AC0/ US262277AC08 U2644RAB1/ USU2644RAB16	$250,000,000	9% Senior Notes due 2014	$1,050.00	$30.00	$1,020.00
262277AB2/ US262277AB25	$400,000,000	7.375% Senior Notes due 2016	$1,040.63	$30.00	$1,010.63

* Per $1,000 principal amount of Notes.

Holders validly tendering Notes at or before the applicable Consent Payment Deadline will be eligible to receive the Total Consideration with respect to the series of Notes tendered. Holders validly tendering Notes after the applicable Consent Payment Deadline but at or before the Expiration Time for such series of Notes will be eligible to receive only the Tender Offer Consideration for such series of Notes, namely an amount, with respect to such series of Notes, equal to the Total Consideration less the Consent Payment. In addition, holders whose Notes are purchased in an Offer will receive accrued and unpaid interest in respect of their purchased Notes from the last interest payment date to, but not including, the applicable payment date for the Notes. Tenders of Notes will be accepted only in principal amounts of $2,000 or integral multiples of $1,000 in excess thereof.

The Company has reserved the right, at any time following the applicable Consent Payment Deadline but prior to the applicable Expiration Time (with respect to such series of Notes, the “Early Acceptance Date”), to accept for purchase all Notes validly tendered and not validly withdrawn on or before the applicable Early Acceptance Date. If the Company elects to exercise this option, the Company will pay the applicable Total Consideration or Tender Offer Consideration, as the case may be, for the Notes accepted for purchase promptly following the acceptance of Notes for purchase (the date of such payment, with respect to the applicable series of Notes being referred to as the “Early Payment Date”).

Subject to the terms and conditions of an Offer being satisfied or waived, the Company will, promptly after the Expiration Time with respect to such Offer (the “Final Acceptance Date”), accept for purchase all Notes of such series validly tendered at or before the applicable Expiration Time (and not validly withdrawn at or before the applicable Withdrawal Deadline)(or if the Company has exercised its early purchase option as described above, all Notes validly tendered after the Early Acceptance Date and at or before the Expiration Time for such series of Notes). The Company will pay the Total Consideration or Tender Offer Consideration with respect to such series of Notes, as the case may be, for Notes accepted for purchase promptly following the acceptance of such Notes for purchase (the date of such payment with respect to a series of Notes being referred to as the “Final Payment Date”).

The Company’s obligation to consummate an Offer is subject to the satisfaction or waiver of certain conditions, which are more fully described in the Statement, including, among others, (i) the completion of the proposed investment by an affiliate of ITOCHU Corporation in the Company’s Colombian coal operations and related transportation infrastructure on terms satisfactory to the Company, (ii) receipt of the requisite consents to authorize the Proposed Amendments to the applicable indenture (consents in respect of a majority of the outstanding Notes of such series are required to authorize the Proposed Amendments relating to such series of Notes) and (iii) execution and delivery of a supplemental indenture giving effect to the Proposed Amendments relating to such series of Notes.

The depositary and information agent for the tender offers and consent solicitations is D.F. King & Co., Inc. Holders with questions or who would like additional copies of the offer documents may call the information agent, D.F. King & Co., Inc., toll-free at [phone]. Questions regarding the terms of the tender offers and consent solicitations can be directed to the exclusive dealer manager for the tender offers and solicitation agent for the consent solicitations, BofA Merrill Lynch ([phone]) (toll-free) and [phone] (collect)).

This news release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell the Notes. Each Offer and the consent solicitation are being made only pursuant to the Offer Documents that the Company will be distributing to noteholders promptly. Noteholders and investors should read carefully the Offer Documents because they contain important information, including the various terms of and conditions to the tender offers and the consent solicitations. None of the Company, the dealer manager and the solicitation agent, the depositary, the information agent or their respective affiliates is making any recommendation as to whether or not holders should tender all or any portion of their Notes in an Offer or deliver their consents in the related consent solicitation.

Drummond Company, Inc. is a leading producer and marketer of high-quality steam and metallurgical coal. The Company’s current coal mining operations are located in Colombia and in the Southern Appalachian region of the United States. The Company also has coke, real estate and other operations, including royalty-producing land management activities.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This news release contains “forward-looking statements.” You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Forward-looking statements may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will,” or words or phrases of similar meaning. Because forward-looking statements reflect the Company’s current views with respect to future events and are based on assumptions, these statements are inherently subject to risks and uncertainties. Many factors could affect our forward-looking statements, including, among others, the completion of the tender offer and the receipt of consents to approve the Proposed Amendments to the indentures governing the Notes. New risk factors can also emerge from time to time. It is not possible for us to predict all of these risks, nor can we assess the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in forward-looking statements. Given these risks and uncertainties, actual future results may be materially different from what we plan or expect. We will not update forward-looking statements, even if our situation changes in the future, except as required by federal securities laws.