CHARLESTON, W.Va. -- Massey Energy executives moved toward a sale to Alpha Natural Resources as internal pressures grew for a broad-ranging examination of -- and potentially major reforms in -- the company's long-troubled safety practices, according to new court documents made public Tuesday.
In November, a committee from Massey's board of directors was prepared to recommend creation of a "blue-ribbon" panel of outside safety experts, similar to the Baker Panel created by BP after the deaths of 15 workers in a 2005 refinery explosion.
The board committee also had determined that a change in the top leadership at Massey -- including then-CEO Don Blankenship -- was needed to rebuild the company's reputation and to regain the confidence of shareholders, regulators and public officials, according to the court documents, filed by lawyers who are seeking to block the Massey-Alpha transaction.
"The board thus realized that Blankenship had to go," the lawyers, representing a group of Massey shareholders, said in a legal brief supporting their argument for a preliminary injunction to at least stall the merger.
"It is clear at this point that the board realized the advisory committee viewed Massey's safety and regulatory issues as a pervasive, top-down problem that could only be remedied by many long months of outside experts auditing Massey's operations and making sweeping recommendations for wholesale change," the lawyers wrote. "Massey's reputation was so damaged that in its current state, it could not even attract the necessary candidates to staff a blue ribbon panel -- no one wanted to tough the assignment and risk potentially being linked to the likes of Blankenship."
Given the situation, the lawyers argue, Massey's board members realized "that they were left with few, if any, alternatives to a sale of the company."
The new court documents add to the growing intrigue as the June 1 date approaches for the boards of both Massey and Alpha to consider the proposed $8.5 billion transaction in which Alpha would take over Massey.
In separate lawsuits in West Virginia and Delaware, groups of Massey shareholders are seeking to block the deal. They argue that that it's a bad deal for Massey shareholders, and that corporate insiders would profit from it and perhaps insulate themselves from liability over poor management of Massey and the deaths of 29 miners in the April 5, 2010, explosion at Upper Big Branch.