RAG Coal International Sets Stage for Sale of All Foreign Mining Operations

Essen Within a few weeks RAG Coal International AG has cleared the way for the sale of all its foreign mining operations. RAG Coal International has signed a memorandum of understanding for the sale of RAG American Coal Holding, Inc. which provides for a period of exclusive negotiations with a U.S.-based private equity consortium consisting of First Reserve Corporation, The Blackstone Group and American Metals & Coal International (AMCI).

Already in November and December 2003 RAG Coal International signed memoranda with the market leader, Peabody Energy, for the sale of its mining activities in Australia, Venezuela and Colorado. The new memorandum signed with the U.S.-based consortium covers the remaining mines in the United States, including the big open cast mines in the west and the highperformance underground mines in the east, with a total annual production of 65 million tons. RAG American Coal Holding is one of the largest American coal producers, serving customers all over the United States.

“The sale to a private equity group would enable the management of RAG American Coal Holding to continue to successfully develop the business,” RAG Coal International CEO Juergen W. Stadelhofer pointed out. “The fact that we can sell all mining activities to prominent investors clearly demonstrates the high value of RAG’s overseas assets. Subject to the approval of the antitrust commissions and RAG authorities, we are targeting for a transaction to close by the end of the first half of 2004.” The transaction is subject to a number of conditions and the negotiation of definitive agreements.

In 1999, the RAG Group combined all foreign coal and mining related activities within RAG Coal International AG. The company is now focusing on its market leading mining equipment and coal trading activities.

The Blackstone Group (www.blackstone.com), a leading global investment firm, has raised over $14 billion for private equity investing across a number of industries, including investments in the energy industry. Blackstone Capital Partners IV is the largest institutional private equity fund ever raised at $6.45 billion. Blackstone is headquartered in New York and is advised on its European investments by offices in London and Hamburg. The Hamburg office advises on fund investments in the German speaking and Northern European markets.

First Reserve Corporation (www.firstreserve.com), based in Greenwich, CT, is the largest and oldest private equity firm specializing in the energy industry with $4.7 billion under management across four active funds. Throughout its 20-year history, First Reserve has developed a strong franchise of investing exclusively in the energy industry, utilizing its broad base of specialized industry knowledge. First Reserve has funded more than 80 principal transactions and completed more than 200 add-on acquisitions with its core companies.

AMCI is a privately owned company with interests in coal operations in the United States and Australia.