Print

Email story

Comment

Email editor

Coal mine stretches to high society

By ROBERT TRIGAUX
Published January 9, 2006

Conventional maps don't show it but West Virginia's Sago Mine, where 12 miners died last week 260 feet below ground, is just around the corner from the elite towers of New York and the high society of Palm Beach.

Just look at the corporate map. You'll see.

Billionaire investment banker Wilbur Ross - known at 67 by such names as the "king of bankruptcy" and "bottom feeder" - ultimately heads the company that owns Sago Mine. I doubt Ross personally ventures down Appalachia's black tunnels. But he regularly wanders darker corners in search of troubled companies and assets to acquire on the cheap and resell for big profits.

Ross' International Coal Group, a private company in Ashland, Ky., bought Sago Mine from bankrupt Anker West Virginia Mining Co. last year. International Coal was assembled two years ago by a Ross-led investor group that bought twice-bankrupt Horizon Natural Resources for about $291-million. International Coal Group now boasts reserves of nearly 1-billion tons of coal, enough to last 60 years. Earlier Wall Street rumors even had Ross' International Coal sniffing at the Alabama coal mines belonging to Jim Walter Resources, part of Tampa's Walter Industries.

We've heard this story before. The names have just changed.

You may recall the 2002 tale of the water-filled Quecreek Mine that trapped nine miners underground in rural western Pennsylvania. That story ended differently - joyfully - as all of the trapped miners were dramatically, safely rescued.

But wind your way through all the layers of local business and corporate owners of Quecreek, and the trail leads to New York banking giant Citigroup.

Ross with his Sago and Citigroup with its Quecreek know the secret of coal. Squeeze it long and hard enough and you get diamonds.

Ross' track record is steeped in deals involving out-of-favor industries, from steel to textiles and now coal. On Oct. 25, 2004, for example, Ross struck a deal with Lakshmi Mittal, owner of a Dutch conglomerate, to sell his International Steel Group (formed from the remains of Bethlehem Steel and others) for $4.5-billion. Ross' take? Nearly $300-million.

"In steel, every single company we bought would have been liquidated had we not bought it," Ross said in a New York magazine story. The profile describes how the unsentimental Ross auctioned off his collection of American pre-Raphaelite paintings to help settle his divorce from New York's former lieutenant governor, Betsy McCaughey Ross.

"Our only girlfriend is IRR (internal rate of return)," is a line Ross likes to repeat.

Lately, Ross is just as likely to appear in high society columns celebrating the 2004 marriage to his latest wife, Hilary Geary, than in Wall Street trade publications gushing over his leveraged buyouts. At a New Year's Eve bash a week ago in Palm Beach, Ross landed at a swank late-evening party at the Flagler Museum for something called the "Coconuts" dance. Coconuts is an exclusive social club of just 25 members that society columns approvingly note includes Ross. He was inducted this year.

Ross' financial reach is long, and even wanders into Tampa Bay's business world.

Just a month ago, a company called Zapata Corp. completed the sale of its stake in a company called Safety Components International Inc. to Ross for just more than $50-million. Zapata is controlled by Tampa Bay Bucs owner Malcolm Glazer, who probably is glad to see some fresh cash given his challenges to revive his latest and highly leveraged sports acquisition: Manchester United, Britain's mega-soccer team and one of the world's highest-valued sports franchises.

Ross' International Coal Group also includes a director with local ties. William J. Catacosinos joined International Coal's board last year. He also serves on the board of Preservation Sciences Inc. in St. Petersburg, a business that markets food preservatives.

Is there a lesson here?

Here's one: Coal may help heat the homes of America but it increasingly warms the pockets of some very big-buck individuals and Fortune 100 corporations.

I was born in West Virginia, and though I left the state as a tot, I returned often to visit family. My tall and tough uncle lived outside of Charleston, and he enjoyed driving us into the back country to look at the coal mines. They were everywhere, and they were grim. I think my uncle wanted to show me what I had missed by moving away. And to keep the memory alive.

When assets like a West Virginia coal mine are severely leveraged by clever buyout artists, the many miles between Sago's miner families in Upshur County and the Palm Beach winter social circuit can shrink to inches.

Robert Trigaux can be reached at trigaux@sptimes.com or 727 893-8405.

[Last modified January 7, 2006, 01:28:52]