Wilbur Ross Actions As Head of Horizon Natural Resources Creditor Committee Unfair According to Third Point Management Company

    NEW YORK, Sept. 23 /PRNewswire/ -- Third Point Management Company LLC has
 sent the following letter to Wilbur L. Ross in his capacity as head of the ad
 hoc creditors committee for Horizon Natural Resources.
     Third Point is one of the largest creditors of Horizon, and objects to
 Ross and the other members of the ad hoc committee choosing to receive a
 $3.75 million fee in significantly undervalued equity, rather than in cash,
 which is called for in the plan of reorganization.  By receiving this fee in
 equity, Third Point and other creditors are unfairly diluted.
     Daniel S. Loeb, Managing Member of Third Point commented: "If Horizon
 can't pay Wilbur's fee in cash per the agreement, then those shares should be
 offered for sale to all creditors to raise the cash for the fee.  That's the
 fair thing to do, and Third Point is willing to buy any shares that other
 creditors don't want to make sure Wilbur gets paid.  We have to protect our
 investors, and will consider legal action if Wilbur won't do the right and
 honorable thing."
 
     The letter reads:
 
      VIA US MAIL AND FACSIMILE
 
      September 23, 2004
 
      Wilbur L. Ross
      NewCoal, LLC
      c/o WL Ross & Co. LLC
      101 East 52nd Street
      19th Floor
      New York, NY 10022
 
      Dear Wilbur:
 
      Third Point Management Company L.L.C ("Third Point") is a holder of
      approximately $37 million of Second Lien Notes (the "Notes") issued by
      Horizon Natural Resources Company ("Horizon" or the "Company"), making us
      one of the Company's largest creditors.  We estimate that we will own
      approximately 6.5% of the Company following its anticipated emergence
      from bankruptcy.
 
      We were aware that the ad hoc creditors committee (the "Ross-led
      Committee") was to receive a cash fee of $3.75 million as provided in the
      Third Amended Disclosure Statement dated July 11, 2004 and Amended Plan
      of Reorganization (the "Disclosure Statement" and "Plan", respectively).
 
      The reason we are writing you, in your capacity as head of the
      restructuring process, is your bald attempt to obtain a windfall by, in
      our view, "double-dipping" and taking payment of this fee in
      significantly undervalued equity (the "Windfall") rather than cash, as
      proposed in the Disclosure Statement. We received notification of the
      Windfall in a letter to creditors that you sent "at the 11th hour," the
      day after we wired funds to help finance the Company's emergence from
      bankruptcy. The resulting dilution of 2.48 million shares is unfair to
      other second-lien note holders and is inconsistent with terms set forth
      in the Disclosure Statement.
 
      We regret having to contact you in this manner, but we attempted in vain
      to reach you yesterday, having left two telephone messages; your failure
      to speak to us has left us with no other choice. We were eventually
      forwarded to your partner, Wendy Teramoto, to express our confusion and
      dismay over your apparent self-dealing in connection with the Windfall.
      Wendy (who promised to call back and still has not) stated that it was
      UBS Securities ("UBS') that demanded that this fee be paid in equity
      rather than cash. Given that UBS was originally comfortable with
      $150 million of term debt and the adjusted credit facility will provide
      for $145 million in acquisition debt, $3.75 million does not seem like an
      excessive financial burden for the Company. Furthermore, if the fee was a
      stumbling block to obtaining financing we believe a more honorable course
      would have been to simply waive the fee and thus complete the financing
      and restructuring process.
 
      Your timing of this notification on September 21, 2004 is, to put it
      charitably, unfortunate considering that all subscriptions for the rights
      offerings were due on September 22, 2004. We believe that all creditors
      should have the opportunity to purchase these shares and fund the cash
      payment to the Ross- led Committee. Third Point is willing to guarantee
      that all 2.48 million shares are purchased so that your fee can be paid
      in cash.
 
      In conclusion, we will not rescind our subscription, but be advised that
      we are reserving our rights to pursue any and all legal and other
      remedies relating to this matter.  Given that the value of stock being
      issued is below market, we will seek to disgorge any value post-closing
      from the appreciation of these shares that rightly belongs to the entire
      creditors group.
 
      Wilbur, we mean you no disrespect by sending you this letter; it simply
      appears to us that the many years you spent generating fees as a
      financial advisor makes it irresistible for you to try to extract fees in
      your relatively new capacity as a principal.  We urge you to avoid the
      temptation to use your position as the head of the restructuring process
      or in the future as Chairman of the Company, to extract special,
      unwarranted consideration not provided to those with whom you have a
      fiduciary relationship.
 
      I know that other large creditors, with whom we have spoken, such as JANA
      Partners (holder of $20 million face amount of the Notes), share our
      concern about the Windfall and your conduct. We urge other creditors who
      share these views to contact you.
 
      Sincerely,
 
 
      Daniel S. Loeb
      Managing Member
 
     About Third Point Management Company LLC
     Third Point Management advises a number of funds that target value-
 oriented, special situation and catalyst-driven investments.  The firm manages
 approximately $1.4 billion in assets, was founded in 1995 by Daniel Loeb, and
 is based in New York.
 
     Media contact:
 
     Edward Rowley / Kathleen Merrigan
     The Abernathy MacGregor Group, Inc.
     (212) 371-5999
 
 

SOURCE Third Point Management Company LLC

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