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evergreen

a method of superfiduciary investing in negotiated agreements on strategy and sharing

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AUGUST 2014!
EXPANDED AND UPDATED CASE STUDY!
EVERGREEN BUY-OUT OF THE US COAL INDUSTRY!
FOR A PLANNED EARLY RETIREMENT OF THE CARBON BASED FUEL ENERGY SUPPLY INFRASTRUCTURE,
SIZED AND TIMED TO THE REGENERATION OF CAPITAL, JOBS, ENERGY AND ECOSYSTEMS
WITHIN AN EVENT HORIZON THAT WILL AVERT A CLIMATE CATASTROPHE!

C rea ti ve d e st ruct io n f ro m the ins id e, out .!


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e v a n g e l i z i n g e v e r g r e e n . w e e b l y. c o m

About this Study!


This Case Study is a theoretical exercise designed to illustrate how a series of evergreen agreements on strategy
and sharing made between superfiduciary sponsors and enterprise leaders in fossil fuels can catalyze action on
climate inaction.!
There is an important point of inflection in the campaign to transition to action from inaction on climate change. Theat is the superfiduciary viewed as a financial intermediary in its own right. By superfiduciary" we mean the few
who have been entrusted with discretionary control over the money of the many: pension plans, insurance companies, university endowments, charitable foundations, sovereign wealth funds.!
The impact coal combustion on climate is broadly felt throughout the population. Superfiduciary broadly representative in many ways, the entire population. There is good alignment there. Alignment that is much more difficult to
achieve if we interpose the Growth Imperative on which the currently dominant and default form of investing as
securities trading operates.!
The goal is to remove the interference of the Growth Imperative by transiting a meaningful percentage of the worlds
fossil fuel resources out of Public Markets Ownership, with its imperative for Growth, and into superfiduciary stewardship, with its mandate to endure, so that a new voice can enter the climate debate, a voice with the power to counterbalance the self-interest of the Public Markets in perpetuating our current fossil-based energy infrastructure.!
This new voice we are creating will represent a balance not present in the debate today, It will come from people inside the fossil fuels industry, but a newly self-constituted group of insiders who also have an overriding responsibility to future times and successive generations, and who are therefor both willing and able to superintend a planned
early retirement of fossil fuels, if that is truly what we need to to do to avoid a climate catastrophe.!
This proposal derives from the observation that the current debate on climate action is being overweighted by the
strategies and tactics of fossil-fuels incumbents seeking to spread doubt and foster delay, rather than engage in open
and honest debate. We have seen the incumbency offer a range of views on climate change, from climate denial to
denial that change in man-made to saying there is nothing we can do about it anyway, to saying we can just wait, and
someone else will invent a solution later on. None of this ends the debate, but it does effectively foster inaction. For
the fossil incumbency, inaction is victory.!
The goal of this Study is to present a new path to action on climate inaction.!
This is not a complete solution. There is much need for more research and debate on what actions we can and should
be taking to avert a climate catastrophe. For one thing, there still needs to be a consensus formed among scientists,
engineers, entrepreneurs, consumers, investors and the taxpaying public about the new energy infrastructure that we
need and can build to replace our current fossil-based energy supply system.!
This consensus does not exist. It needs more research, and debate. The vested interests of the fossil fuel incumbency
do not want such a debate. They do not want the competition. Right now, they have a near-monopoly, and they are
using their monopoly powers to stifle research, delay debate and protect their position.!
Evergreen offers a choice that can break their monopoly, empower research and free debate so we can build a new
consensus, and a new prosperity.!

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Fit for the Right Purposes. Right at the Right Times.!


Our proposal is based on the provocation that we can use superfiduciary investment through negotiated agreement on strategy and sharing to compete for control over the conversation on climate change. This will be good
for building the political will required to make the policy choices we must make to support a successful transition
to a carbon-balanced energy infrastructure. !

Our proposed addition of negotiated agreement directly with enterprise for sharing directly in customer revenues
as the primary, if not the only, strategy for realizing returns both of and on invested funds to the investment
choices available to pension plans and other similar institutional stewards of super fiduciary funds through a
perpetual or self=-perpetuating trust, promises to change the conversation on climate. It also promises to give us
better balance in our pension system, restoring balance to the Capital Markets, to Banking, to the Economy and to
the relationship between People and Planet.!

A major premise of this Study is that many of the most powerfully intransigent obstacles to action on climate inaction
are rooted in the equally deep-rooted and intransigent problems we are having with a financial system that is not
working the way we need, want and think it should be working. As long as the financial system continues to work
the way it now does, we will struggle to organize meaningful action to end climate inaction. !
There are three ways that we can fix our financial system:!
1. regulation;!
2. behavior modification;!
3. systems transformation.!
The right choice depends on the cause of the malfunction. If the normal operation of the system needs to be protected against the predations of bad actors, regulation can be effective. If the system is fine, but its mores need to be revised, campaigns to change they way people behave within the system can be the way. If the system itself is being
used to achieve a purpose that system was never built to achieve, then the system itself has to be changed.!
The last is the situation with our financial system today. We need a system that is built for living well within planetary limits. We have a system that is built for infinite expansion into an endless frontier. We cannot expect a system
that is built for expansion to fit the purposes of living within limits. The fix we need is to re-form our financial system, by changing the way that system is formed.!
We start with the premise that change, and evolutionary adaptation to change, is the true story of human history, and
the real engine of our prosperity. It works like this. Most of what we have, we keep. Some things we add, new. Others, we let go.!
Speculation is about the adding new.!
Stewardship is about the letting go.!

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Our current financial system is built on speculation. It is purpose built for the adding new. This is something it does
very well. It handles the letting go through bankruptcy. In this system, you go and grow, until you cant. Then, you
go bankrupt.!
Climate change is one of the places where the letting go has become critically important to our economy today. We
have to let go of the existing fossil-based energy infrastructure if we are to avoid a climate catastrophe.!
The currently dominant and default system of finance through securities trading is not built for letting go. We need to
build a new system that is.!
Fortunately, we have pensions as a new technology for aggregating savings that is purpose-built for stewardship.
Pensions do not have to grow. It is enough that they endure, and continue earning the incremental earnings they
need to discharge their fiduciary obligations to an endlessly self-regenerating population of current and future retirees. Pensions can finance the letting go, as long as they can replace the earnings that are lost in the letting go with
new investment made elsewhere in the economy.!
This can be accomplished by adaptively evolving the proven, reliable equity payback structure commonly used in
Real Estate to investment in enterprise of any kind, all across the Real Economy, through negotiated agreements on
strategy and sharing in customer revenues as the primary, if not exclusive, architecture for realizing returns.!
We call this evergreen direct investing.!
In evergreen, there is no need to sell. So there is no need to keep going. Once an evergreen investment has earned at
least a minimum fiduciary rate of return, we can just let go.!
This is how we can use pensions and other superfiduciaries of perpetual trusts, to finance action and climate inaction.!
We can use evergreen direct investing to take fossil fuel companies out of Public Markets Ownership, and free them
from the imperative to grow. We can instead put them into stewardship hands, where we can plan for an early retirement that is sized and timed to the construction of a new energy infrastructure that is not hostile to a humanfriendly planet.!

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Evergreening US Coal!
The evergreen Theorem!
The evergreen theorem is built on five principles, two for designing enterprise, and three for engineering investment,
as follows.!
Designing Enterprise!
1.

integrity;!

2.

authenticity; !

Engineering Investment!
3.

strategy!

4.

liquidity!

5.

legalities.!

Integrity refers to a complete and cohesive configuration of knowledge, networks and routines for monetizing
unique artifacts of technology that are valued by others. In the case of fossil fuels the technologies in question include exploration, extraction, refinement and combustion. In the case of Coal, this means mining, washing, grading,
transport and incineration to make steam, in the case of power generation, or for metallurgical process heat.!
Authenticity refers to the popularity of the technology over time. In the case of energy, this can be modeled as enduring indefinitely and growing in lockstep with overall economic growth, reflecting the fundamental primacy of energy
in all aspects of the economy. In the case of fossil fuels, this can be modeled as a near-monopoly that in the absence of
supply shortages or climate considerations, will continue indefinitely. In the case of Coal, however, this must be modeled as an industry at the low end of a long decline, losing popularity steadily to other fossil fuel technologies. With
the recent discoveries in shale gas, Coal is suffering through another major competitive decline in popularity. At the
same time, ongoing public concerns about environmental impacts continues to drive regulatory constraints on the
continued combustion of coal for power generation. It is unclear at this time how well and for how long, coal can
hold out against the twin pressures of competition and environmental regulation. Action on climate inaction will
certainly accelerate the final exit of coal from our economy, but how much acceleration will actually be needed is unclear at this time. This is actually problematic for our plan to use evergreen investment architectures to finance an
early retirement of coal. If coal is forced out of the economy by competitive pressures, a planned retirement may not
be possible!
Strategy refers to a defined plan for creating new physical wealth and generating recurring revenues streams from
identified customers/markets using specified facilities and teams, specified sources of supply and specified equipment and facilities. A strategy may be stabilized by contracts or commitments with identified counter parties. In the
case of Coal, a strategy will be for the supply of coal of a particular quality and quantity at agreed prices to a specified power plant, generating utility or cluster of utilities or for metallurgical purposes, from a particular mine or coal
formation.!

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Liquidity refers to the spreadsheet models of the Revenues, CAPEX, OPEX, Debt Splits and Equity Splits expected to
be generated through the successful execution of the sponsored strategy within a specified period of time, or event
horizon, that is long enough to support the regeneration of invested capital plus the discharge of the associated fiduciary burden, but short enough to allow a high enough degree of confidence that the expected revenues will be generated and shared as modeled. In an ordinary evergreen investment, the sponsored strategy will usually be expected
to continue generating revenues from customers even after the modeled period, and the superfiduciary sponsors will
continue to share in their split of those revenues for as long as the enterprise continues to generate positive revenues.
In the case of the Coal Transition, the enterprise will be put into planned early retirement as soon as possible after
invested capital has been recovered and the associated fiduciary burden discharged, subject to the availability of suitable replacement source of energy and jobs, and to the proper restoration of damaged ecosystems.!
Legalties refer to the private laws of negotiated agreement that give legal meaning and consequence to modeled expectations. In all cases, this will include an investment agreement of some kind, most often probably a limited liability company operating agreement, setting forth the agreed terms of the sponsored strategy and sharing in customer
revenues. In some cases, legalities may include customer purchase contracts, resource and technology contracts and
other legal arrangements that bind key participants into the sponsored strategy. In the case of the Coal Transition,
legalities will include protocols for implementing the planned early retirement of the mine or mines included, and
may include pre-agreed sales of unmined coal and lands to a conservation trust or other transfer to ensure non-commercial use of the unmined coal remaining after retirement. !
Working from Public Data, without Drilling Down!
This Case Study is a theoretical exercise applied at the overall US coal industry level, focused only on thermal or
steam coal sold for power generation.!
Revenue expectations are calculated based on prognostications for total coal purchases for electric power generation
published by the United States Energy Information Administration (EIA) and associated annual average prices,
also supplied by the EIA.!
CAPEX (capital expenses) are calculated by discounting expected Revenues after budgeted OPEX (see next) at assumed minimum return thresholds within a 10 year went horizon, to achieve a leveraged buy-out price for the industry as a whole. The 10 year base case event horizon is a compromise between the demands of climate change activities for an immediate end to coal combustion and the commercial need to pay a price that will approximate market
value while also allowing superfiduciaries to regenerate their invested capital and discharge the fiduciary burden
imposed on that capital within the allowed period. These calculated buy-out prices have not yet been correlated to
current share prices for listed US coal mining corporations.!
OPEX (operating expenses) are not reported by the EIA, and are generally not disclosed as industry averages or aggregates. Currently, many if not most coal companies are not generating profits. This is generally attributed to a
combination of high mining costs and low coal prices. A more detailed study may confirm that coal in the US is
headed for irretrievable competitive displacement, through bankruptcy ending in final liquidation. In that event, the
right action will be for us to stand aside, and let that happen. However, there are countervailing forces supporting a
possible return of coal to some level of profitability, albeit on lower volumes. This includes the large installed base of
coal-fired power plants feeding central station power grids that will generate large losses for the utility industry if
they are retired prematurely, even if new sources of power can be brought on-line to replace the generating capacity
they represent (or distributed solar installations can provide effective and competitive distributed power solutions).
This Case Study assumes a return to profitability is necessary, so that a Coal Transition strategy will still be valuable
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as a path to action on climate inaction. To build an OPEX budget we took the operating margin and SG&A allowances
from our earlier Case Study of James River Coal Company conducted based on May 2013 reported financials. James
River Coal Company has since gone into bankruptcy. These OPEX numbers must be considered only as placeholders.
Accordingly, this entire Case Study must be used only to illustrate how evergreen financed Coal Transition might
work. It is not offered as a demonstration that an evergreen financed Coal Transition can work. For that, more study
specific to particular companies will be needed.!
How Negotiated Agreement on Strategy and Sharing Works, Relative to Empowering Action on Climate Change!
The evergreen investment philosophy is built on programmed participation in scheduled cash flows, to an evergreen
tail, to deliver:!
1.

recovery of invested/entrusted funds;!

2.

realization of at least a minimum fiduciary return on investment; and!

3.

upside participation in ongoing wealth creation, to the limit of enterprise.!

Fiduciary return on investment means the regular receipt of cash flows from the original investment that are sized
and timed to meet the payment obligations attached to the funds used to make that investment, for a period of time
at least equal to the schedule for full recovery of that investment. This is also sometimes referred to as the fiduciary
burden.!
Recovery of investment is made in increments, over time, as cash flows are generated within the sponsored enterprise, also in increments over time. The required recovery period will be a function of CAPEX relative to Cash Flow
after Debt, where CAPEX is the original amount of investment required to fund the going-private transaction, and
Free Cash Flow is profit realized on sales, after expenses, including interest and principal repayment on indebtedness.!
The key is being able to schedule the cash flows across a time horizon that encompasses the required recovery period,
plus a comfortable buffer period to absorb any shortfalls in actual versus molded performance by the enterprise.!
Scheduling cash flows requires a plan for the activities to be carried out within the enterprise, expressed as budgets
for:!
1.

Unit volumes, rates and horizons!

2.

Unit prices and periodic Revenues!

3.

CAPEX!

4.

OPEX!

5.

Prudent debt!

6.

Taxes!

7.

Equity splits.!

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Equity splits are the program for sharing out the Free Cash Flow between the pensions, as sponsor of the budgeted
activities, and the enterprise leadership and team that will execute the sponsored plan for the purpose of operating
within or better than the sponsored budget.!
The splits will typically be front-loaded in favor of the pensions, as investors and sponsors, in order to increase the
certainty of recovery and the realization of fiduciary returns. This means they are backloaded in favor of the enterprise leadership and team, to motivate and reward them for reaching and passing the pre-agreed investment return
milestones at or ahead of schedule. Once the final investment return milestone is passed, the sharing is typically
made ratable indefinitely thereafter. This is the evergreen tail that provides upside to the pension, while returning
autonomy to the enterprise leadership and team.!
This Equity Split mechanism splits control over the reinvestment of profits between the Pensions, as investor/sponsors, and the Enterprise Leaders, and strategy executors. !
Pensions recover their investment according to schedule, and these recovered funds are returned to the Pension portfolio, to be redeployed elsewhere, as the Pension may determine. Recovered funds are augmented by the evergreen
tail, after the fiduciary minimums are filled. These tail funds may be added to the portfolio, for deployment in new
investment, which provides compounding inside the pension portfolio. They may be paid out currently, as incremental benefits or to reduce the contributions required from the plan sponsors. How those tail funds get applied will be a
key feature of the Investment Beliefs for each Pension Portfolio.!
In the typical case, Enterprise Leadership will start out with small shares of free cash flow, and limited discretionary
power to invest, but as pre-agreed investment return milestones are passed, these shares will increase, as will Enterprise freedom to decide if, when and how to reinvest.!
In our case, however, this rule will likely be modified. Since the goal is to break the cycle of reinvestment to perpetuate the existing fossil fuel energy infrastructure, covenants will restrict reinvestment. Tail profits, especially, will be
earmarked for investment in the construction of a new, climate-friendly, energy infrastructure. Part of this tail investment might be directed to carbon sinks. That is the acquisition of grasslands and forestlands to be managed in
perpetuity as habitats for carbon capture through photosynthesis, in order to re-establish and then maintain a foodcrop-friendly chemical composition in the atmosphere.!
Scheduling cash flows requires a focus on a specific, defined strategy for generating those cash flows. In the evergreen philosophy, we describe that strategy, generically, as organizing a configuration of knowledge, networks and
routines for monetizing a specific set of unique artifacts.!
In our case, the artifacts to be monetized will be fossil fuels. !
The General Evergreen Pattern Applied to the Specific Case of Fossil Fuels!
The work of monetizing fossil fuels is a natural resources extraction, refining and transportation enterprise serving
one of three energy consumption networks:!
1.

central station electric power generation;!

2.

local heating and distributed power generation (primary or grid back-up);!

3.

tools and transportation.!

Each of these networks is large, well-established, standardized and regulated for fairness, efficiency and reliability.!
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This makes fossil fuels an excellent candidate for evergreen financing. Costs are well known, and sales volumes and
prices can be scheduled by reference to large databases of historical information on market dynamics. In many cases,
schedules can be further stabilized by multi-year contracts, and other similar commitments or established courses of
dealing.!
Coal is the largest contributor to carbon chemistry imbalances in the atmosphere, which makes it the logical place to
begin a Marshall Plan to preserve/reset the carbon balance in the atmosphere. It is also a commodity whose customers consist almost entirely of utilities that operate as regulated monopolies. And it is currently fighting against
intense competitive pressure from new discoveries of natural gas that is putting downward pressure on coal prices,
as well as reducing utility demand for coal.!
International trade in coal provides some relief against downward pressure on demand, but has not to date provided
upward support for coal pricing.!
In combination, these factors are currently making it difficult for publicly-traded coal companies to meet Market demands for growth in share price, which makes now perhaps an opportune time for Pensions to step forward offering
a stewardship option to these companies, via Evergreen Private Equity financing to take these companies out of the
public markets.!
Coal executives may find such an opportunity attractive, as a timely way of transitioning out of the downward spiral that seems to be the new future for coal, and into some other enterprise that shows more future
promise.!
Coal workers will find such an opportunity attractive if there is a plan included for helping them deal with
the dislocation they will suffer as the industry continues to wind down. Richard Trumka, President of the
AFL-CIO and himself a former coal miner, promised as much in a recent speech delivered at the UN Investor Summit on Climate Change.Coal buyers may find such a change amenable to their needs, especially
to the extent they are regulated utilities under increasing pressure from environmental regulation to reduce
their use of coal in power generation.!
In sum, coal looks like an auspicious place to begin.!
Lets look at how that can be done.!
The US Coal Industry, In Profile!
Designing the Coal Mining Enterprise!
Knowledge!
The most important thing to know in the coal mining business is where to find the coal. Coal is always buried underground, usually in massive geological formations. In the US, coal formations have been identified in 3 major geological formations.!
1. Appalachia, running from Pennsylvania to Northern Alabama.!
2. Interior, mostly Illinois and Southern Indiana, but south and west into Texas.!
3. Western, including the Powder River Basin in Wyoming, running south through Colorado all the way to New
Mexico.!
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A second important consideration is classification. Coal was originally ranked by heat value, or Btu (British thermal
unit) content into 4 ranks of decreasing heat value:!
1. Antracite;!
2. Bituminous;!
3. Subbituminus; and!
4. Lignite.!
This ranking system originated before considerations of environmental impacts of coal combustion, so that a more
complex set of specifications now determines the market value of coal. In addition to heat content there are also considerations of sulphur content, mercury content, and ash content. Sulphur and mercury are both environmental toxins that must be removed during the combustion process, through scrubbers and reagents. Ash is the residual left
over after combustion. Increasingly this is being used as a by-product, in cement manufacture and other uses, but it
can be a logistical and environment headache for utilities burning large amounts of coal to fire their boilers and spin
their generators. Another consideration is grindability. This relates to the fitness of coal for grinding into coal dust
prior to combustion. This is an increasingly common practice that maximizes the control of coal when used as a fuel.!
Generally, eastern, Appalachian coal has high heat content, low environmental contaminants and good grindability,
which makes it makes it the highest price coal. Offsetting that are high mining costs, so that a high price does not
always equal a robust profit.!
Powder River Basin (PRB) has high sulphur and low heat content, but also low mining costs. It sells for a low price
but generally supports robust profits.!
Other regions fall in between these two extremes, that mark the current characteristics of coal mining in the US.!
A third consideration, just touched on, is mining technology. There are three:!
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1. deep shaft;!
2. longwall; and !
3. surface or strip mining (sometimes called Mountain Top Removal.!
Deep shaft mining is the oldest, the most labor intensive, the most dangerous, and also the most costly, maybe.
Longwall mining makes use of large and expensive machines to carve through the face of a coal seam, requiring fewer miners but also requiring larger upfront investment. It is cost-effective only if the geological assessments are correct, and high capital costs can be spread over large sales volumes, extending over long periods of time.!
Both deep shaft and long wall mines are subsurface. The ecosystems above the coal are undisturbed, except at the
points of entry into the mines themselves. In surface mining, these ecosystems are called the overburden, and they
are stripped away using massive earth moving equipment, to expose the coal below, which can they just be scooped
up for processing, also using massive earth moving equipment. Suraface mining is safer than either subsurface
method, and midway between deep shaft (labor intensive) and long wall (capital intensive) techniques, relative to
cost as a function of recovery (i.e. tons of coal mined and sold).!
A last consideration is application, or market. Coal is really only used for one thing. It is burned to make heat. Lots of
heat. Many years ago it was used to generate both space heat and process heat, but today it is really only used for
process heat. Almost all process heat today is used for one of two applications:!
1. to boil water to make steam to spin turbines that generate electricity, mostly for distribution over a power grid,
but also somewhat for dedicated industrial processes, such as cement making and aluminum smelting; or!
2. to melt iron for making steel, and other metallurgical applications.!
The markets for coal are sometimes referred to as steam coal and met coal. Of the two, met coal rewards higher heat
content with higher coal prices, but the met coal market is only a small percentage, by volume, of the much larger
steam coal market.!
Networks!
Coal is almost exclusively a B2B business. Coal mines deal directly with big customers, like utilities, cement plants
and steel mills, linked by railroads that transport most of the coal from the mine site to the burn site. Much business
is done on directly negotiated, multi-year bilateral supply contracts, but there is also a significant commodity, or spot,
market. This provides reasonable transparency on coal prices, and pricing discipline.!
The reference price for coal is natural gas, because gas is the only fuel that realistically competes with coal for power
generation at utility scale. Many power grids have evolved the capacity to generate electricity from either coal-fired
or gas-fired central station power plants, with utilities switching between generating stations based on various factors
including fuel cost. Sometimes, the gas plants are not actually owned by the utility, but have contracts in place that let
the utility buy power from the plant on an as-needed basis. A gas-fired plant will typically be used as a peaker plant,
for demand response, while coal plants are baseload Coal is very efficient at producing high volumes of heat, but it
is not very responsive to variations in demand. Coal plants work best when they are able to run at full steam, constantly (excepting only complete shutdowns for maintenance). Gas plants are more easily ramped up and down to
balance generation against variations in demand. If gas prices are high relative to coal, gas plants are used discretely,
just to keep the grid in balance, but as gas prices drop relative to coal, gas plants can be brought into service to supply
baseload, as an alternative to coal.!
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This is why the evolution of hydrofracking technologies to release gas from shale formations has had such an adverse
impact on the coal industry. Before 2009, when shale gas first started showing up in the pipeline system (commercial
markets) in quantity, gas was selling of something around $7 per mmBtu (million British thermal units of heat content). In 2012, with a surge of new supplies from shale formations, gas prices fell below $3. They have begun to increase, and are prognisitcaed by the EIA to level off at $4.50. At <$3, gas is cheap enough for utilities to burn as baseload. In combination with regulatory presses to reduce coal combustion for environmental reasons, that motivates
many utilities to reduce their use of coal. As prices for gas rise towards $4.50. the balance improves in favor of keeping coal plants fired up.!
Railroads are important to coal, as pipelines are to gas. Although the cost of freight is most commonly a direct passthrough to the utility, these expenses factor into the competitive equation between gas and coal.!
Environmental considerations are also important. Coal is a dirty fuel. It emits particulates, as well as toxins such as
sulphur and mercury. And, of course it releases carbon that has been sequestered under ground back into the atmosphere, altering the chemistry of our sky, contributing to a greenhouse affect that is raising the temperature of the
ocean, with all its attendant consequences for climate change. The fly ash that is the residue left over after coal combustion is environmentally unfriendly, and difficult to reintegrate into the ecology. Steam generation requires vast
quantities of water, so that coal plants are often sited along major rivers. Hot water left over after steam is extracted to
spin generators and make electricity can be a source of thermal pollution of these watercourses, as well as other toxins that can make their way into the local hydrology.!
For the protection of the environment from the above impacts, coal is heavily regulated and much disfavored as a
matter of public policy.!
Natural gas, by comparison, burns clean, with virtually no emissions and no residue. Many gas plants use hot air
instead of steam, so there is no need to site them near to watercourses, and no concerns about thermal pollution of
lakes and rivers. Gas combustion does release methane into the atmosphere, which contributes to a changing sky
chemistry, the greenhouse effect, rising ocean temperatures and consequent changes in weather and climate. So, from
a climate perspective, the choice between coal and gas is pretty much a wash, which will be important to the design
of a Coal Transition strategy, on which more later. For utilities operating in the current regulatory environment,
which does not currently regulate greenhouse impacts, gas has many advantages over coal, which can make it a preferred choice at the right price.!
Nonetheless, there are many utilities that have large investments in coal-fired generating capacity that cannot easily
be abandoned. These utilities are likely to support coal at some minimum acceptable level of profitability, no matter
the price of gas. We may continue to see declining demand for coal, but it also seems reasonable to expect that coal
prices for the residual demand will return to the price points required to maintain the required supplies.!
This introduces the next level of complexity in constructing an expectation for the near to medium term history of
customer revenue generation from coal sales. This is regional competition, mostly between higher-Btu, but more expensive to mine, Eastern Coal from Appalachia and lower Btu, but less costly Western Coal from the Powder River
Basin in Wyoming.!
It is generally expected that declining demand for coal will translate mostly into declining demand for Eastern coal,
resulting in numerous mine closures, and mining company bankruptcies, in Appalachia. This illustrates the problem
with an unplanned retirement of coal. It results in bankruptcy. Many innocent actors, especially coal workers, their
families and their communities, get hurt.!
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However, there are three powerful vested interests coming together to defend the incumbency of coal and perpetuate
the coal-based energy supply infrastructure against both commercial and regulatory adversities. These are coal, utilities and the railroads, all of whom stand to lose much if coal is abandoned as a preferred energy source.!
Of these, coal is the most singe-purpose, and so also the most vulnerable. For that reason, among others, we have
chosen to make coal the first target for our campaign to take fossil fuels out of the Public Markets Ownership system,
to set them free from the pressures of the Grwoth Imperative and facilitate a letting go of fossil fuels through a program of planned early retirements funded by superfiduciaries investing on the evergreen model.!
Routines!
The routines for coal combustion have become well understood over many, many years, and highly standardized/
commoditized, except for the idiosyncrasies of the actual mining operations, which must be customized to local conditions.!
The steps in the process are always the same.!
1. A coal formation is identified and assessed.!
2. A mining plan is engineered.!
3. Mining operations are commenced pursuant to the mining plan, with amendments and adjustments made from
experience in the field, as appropriate.!
4. Mined coal is sized, separated, washed, graded and loaded onto rail cars for shipment to the customer.!
5. Customer contracts are negotiated and renegotiated at regular intervals to rebalance price, volume and quality
specifications from time to time.!
6. Rail cars filled with coal are transported by locomotive to the customers site, and offloaded for storage and staging in the customers coal yard (usually an open space, exposed to the elements).!
7. Coal is removed from the stockpiles as needed, via heavy equipment and conveyor systems, pulverized or otherwise treated as required by the applicable combustion technology, ignited in a boiler to heat water to make superheated steam (900 F +) which is applied to spin a turbine that generates an electrical current for distribution to a
load.!
8. Water used to make steam is extracted from a nearby lake or river, and spent steam is returned to containment
ponds to cool before being returned from whence it came.!
9. Fly ash is removed from the boiler episodically, and sold for cement making or impounded in a purpose-built
waste sink, indefinitely.!
The principal risks in this business are associated with opening up new mines (the uncertainty of what will be found)
and securing profitable contracts. !
For the Coal Transition, virtually all new mining activity will stop, so those risks will be eliminated, leaving really
only this risks of price and volume to be managed. We have discussed above what we believe are the primary factors
defining the risks of both price and demand. Strategies for minimizing these risk will be included in our proposed
strategy for effecting a Coal Transition and planned early retirement, below.!
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Authenticity of Expectations for Size and Duration!


This Study considers the overall US Coal Industry, rather than any one individual coal industry participant, mostly
because of the information required to begin modeling a planned early retirement for a particular publicly owned
coal corporation is not readily available from generally available, standard Market disclosure channels. This is largely
because Market disclosures focus mostly on Growth strategies and prospects the adding, new where the Coal
Transition is focused mostly on the keeping, until it is time for letting go.!
Information of the US Coal Industry is obtained from the US Energy Information Administration (EIA), sometimes
supplemented by other sources, as noted. !
According to the EIA, the US is home to multiple extensive subsurface coal formations.!
The EIA estimates coal formations in five levels.!
1. Recoverable Reserves at Active Mines!
2. Estimated Recoverable Reserves, not active!
3. Demonstrated Reserve Base, not mineable!
4. Total Identified, not demonstrated!
5. Total Estimated, not identified!
The first category is the most certain, as it is what is actively being mined today. Higher categories represent increasing less certain measures, but include all early categories. That is, the categories are inclusive, not additive. The last
category, which includes estimates derived from geophysical models but not confirmed necessarily by actual field
exploration and discovery, include almost 4 trillion tons of coal.!
To put this number in perspective, the US currently mines about 1 billion tons of coal per year. At that rate, the
largest estimates indicate we have enough coal for 4,000 years. Most of that coal is, of course, conjecture, in that it has
not been explored. Much of it is not feasible to mine with current mining technologies.!
Nonetheless, the sheer volume of coal is vast, so that, all other considerations to one side, it is reasonable to expect
that the coal industry would just keep going for many generations.!
Of course, there are other considerations, including commercial competition from shale gas, regulation of environmental impacts and policy choices around climate impact.!
So, we have an industry in tension, torn between abundant supply and uncertain demand. Add to that an imperative
for growth at the corporate level emanating from the Public Markets Ownership system, and we get an industry under duress.!
The Coal Transition is a plan to ease that strain, by taking away the Growth Imperative, and replacing it with a mission to continue - to just keep going - until it is time to let go.!
This study supports the expectation that this can be achieved inside of a 20 year event horizon, assuming that a replacement energy infrastructure can be constructed within that same time.!

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The EIA tells us that Recoverable Reserves at Active Mines today aggregate to some 19 Billion short tons of coal for
use as fuel. Currently, the US is burring approximately 1 Billion tons of coal per year. At that rate, existing mines can
supply our coal needs for the next 19 years. No new mines need to be opened. We can immediately stop all development of new mines. Additionally, expectations are for coal consumption to decline at the rate of about 1% per year.
This further extends the adequacy of current supplies.!

US&EIA&Measures&of&Coal&in&the&US&
Total&es3mate&=&3,909&Billion&short&tons&(as&of&January&1,&2012)&

Total&Es3mated,&not&iden3ed&
57.2%&

30.4%&
Total&Iden3ed,&not&demonstrated&

5.7%&
6.1%&

Demonstrated&Reserve&Base,&not&mineable&

0.5%&

Es3mated&Recoverable&Reserves,&not&ac3ve&

Amounts&being&ac3vely&mined&=&19.2&Billion&short&tons&

Recoverable&Reserves&at&Ac3ve&Mines&

Annual&rate&of&mining&and&combus3on&=&&1&Billion&short&tons&
Remaining&life&of&exis3ng&mines&at&current&use&rates&=&<&19&years&

If we take away the Growth Imperative, the Coal Industry can stop making new investments to perpetuate the coalbased energy supply infrastructure in the US.!
This Study proposes taking away the Growth Imperative by taking the Coal Industry out of the Public Markets, and
transferring it to Stewardship by Pensions and other Superfiduciaries through a program of evergreen going private
transactions. Depending on the relationship between current share prices (the cost of going private) and future coal
prices (the benefit of being relieved of a Growth Imperative), this Study supports an expectation that these proposed
Evergreen Private Equity (Evergreen PE) investments can discharge their associated fiduciary burdens within 10
years. This leaves up 10 years of an evergreen tail during which cash flows from ongoing coal sales can be reinvested in the construction of a new, replacement energy infrastructure that will not adversely alter the chemistry in our
skies, the regeneration of economic opportunities for displaced workers and their families (in coal, but also in the
utility and railroad industries that will be adversely affected by the planned early retirement of coal), and the restoration of ecologies injured by the mining activities, before they are discontinued.!
Climate science teaches that this is too long to wait. So policy choices may get made to socialize some of these costs
through the taxing system, in order to accelerate the schedule for early retirement. This is a subtle, but critically important, benefit of shifting coal and fossil fuels, generally out of the Public Markets and into Stewardship hands.
Where the Public Markets Growth Imperative is at odds with public policies accelerating the retirement of our fossilbased energy infrastructure, by socializing the costs of that retirement, Stewardship can support such policies, as long
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as the accelerated schedule does not undermine the ability of Superfiduciary Stewards to discharge the fiduciary
burdens imposed on them.!
Engineering the Investment!
This Study must be taken as a provocation for further, more detailed, study of the proposed Coal Transition program
that will test the hypothesis presented below in the context of one or more actual coal companies.!
Strategy !
The basic strategy is as follows:!
1. A club of pensions and other superfiduciry investors is organized to sponsor a team of coal industry operating
experts in executing the planned early retirement of one or more specifically identified, currently public corporations with extensive, if not exclusive, coal mining activities!
2. A new, privately owned corporation will be organized by the club to negotiate a merger with each target company that will see the public corporation disappearing into a non-public corporation. Public shareholders will be
redeemed out of the non-public company on the price and terms specified in the agreed Articles of Merger.!
1. as an alternative, a tender offer could be made for public shares sufficient to control a vote to de-list, with
public shareholders being redeemed, as above!
2. another alternative could be for a number of superfiduciaries with current public shareholdings to contribute
those shares to a voting trust, perhaps in combination with a tender offer to acquire control of the de-listing, if
necessary, with public shareholders again being redeemed out of their public shares, as above!
3. Following the merger.acquisition/de-listing, the acquired corporation will be broken up into discrete parts, as
follows!
1. all non-steam-coal related activities will be sold off, or discontinued.!
2. any coal export activities (other than met coal, which would be sold as above) will be discontinued and the
facilities repurposes and sold or dismantled and sold for scrap!
3. all land ownership and mining rights will be transferred to a Conservation Trust, in perpetuity!
4. a Management Company will be organized by the expert leadership team, and contracted to run all mining
operations according to the agreed plan for early retirement after regeneration of invested capital, jobs, energy and ecosystems!
5. each mining operation will be transferred to a separate limited liability company that will be limited to mining and marketing coal from the associated mine, according to the master plan!
6. a learning and earning company will be set up to work with workers on their personal plans for transitioning
out of coal as each mine is retired - funding for this company will be included as a line item in the budget for
each mine!
7. a land reclamation company will be set up to handle the restoration of the ecology at each mine, as its operations are discontinued - funding for this company will also be included as a line item in the budget for each
mine!
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8. am option to consider is establishing a new energy research institute to be funded as a line item in the budget
for each mine for the purpose of evaluating the commercial viability, and therefor the superfiduciary finance
ability, of competing new energy technologies!
4. Each mining company will contract with the Conservation Trust for mining rights, in return for royalties sufficient
to support the stewardship activities of that Trust and subject to appropriate provision for mining according to the
master plan!
5. Each mining company will contract with the Management Company for management services at rates and on
terms appropriate to each operation, but each mining company will retain its own mining crews and other wooers
and staff dedicated to its activities, as appropriate!
6. Each mining company will be jointly owned by the Superfidicuairy Sponsorship Club and the Management
Company, using a priority payback structure for sharing in cash flows to equity for an accelerated discharge of the
associated fiduciary duty on invested capital (pro-rated from the original Evergreen PE price) followed by an incentive allocation to the enterprise leadership for achieving early retirement according to the master plan!
7. Each mining company will seek to secure and maintain multi-year contracts to supply coal to local utilities at
prices favorable to the accelerated regeneration of investment, energy, jobs and ecosystem leading to an early retirement of each mine.!
Liquidity!
This Case Study uses general information for the US Coal Industry overall, sourced from EIA.!
Volume, Rate, Horizon!
We begin with annual volume prognostications over a 20 year event horizon. This corresponds to estimates of the
total amount of coal that is currently being mined, with no new mines being opened.!
At an estimated 1 billion of short tons per year, this sums to 19.2 billion short tons over 20 years. (A short ton is a metric ton consisting of 2,000 pounds [versus an imperial ton at 2,200 pounds] Metric tons are the standard unit for international shipping.)!
The actual volumes used in modeling this Case Study use EIA prognostications for steam coal use only (i.e. coal for
power generation, not including metallurgical applications) and assume no new mines are opened, resulting in the
entire US Coal Industry coming to a stop in 17 years, as follows. (see next page)

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!
Year of Model (Base Case) Coal Consumption (in millions of short tons
1

893

845

865

884

892

897

903

905

913

10

919

11

919

12

922

13

922

14

923

15

923

16

921

17

798

18

19

20

This patterns seems inconsistent with a managed reduction on coal combustion for power generation, sized and time
to the construction of a new energy infrastructure that is not fossil-based, indicating an important area for further
study.!

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Prices and Revenues!


This Study uses EIA prognostications of future coal prices that show coal rebounding from current low levels, based
on price increases for shale gas. These prices are industry average, and so represent a blending of prices for Eastern
Applachian and Western Powder River Basin coal, which actually sell at very different price points.!
A more refined study will drill down to regional, and even mine-specific, levels when modeling future pricing expectations.!
Revenues are a simple calculation of volume x price, as shown in the table that follows.!

Year of

Coal Consumption

Expected Average

Modeled Periodic Revenues (in $Millions

Model

(in millions of

Selling Price (in

USD

(Base

short tons

USD)

893

48.14

42,989

845

49.10

41,490

865

51.15

44,245

884

53.30

47,117

892

54.91

48,980

897

56.21

50,420

903

57.81

52,202

905

59.42

53,775

913

61.00

55,693

10

919

62.93

57,833

11

919

64.74

59,496

12

922

66.60

61,405

13

922

68.48

63,139

14

923

70.39

64,970

15

923

72.26

66,696

16

921

74.47

68,587

17

798

76.62

61,143

18

78.74

19

81.18

20

83.65

Case)

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Note that the price prognostications from EIA continue for the full 20 years (and keep going thereafter). That is because EIA assumes new investment will be made to open new mines to perpetuate our coal supply infrastructure
indefinitely.!
This Study makes the probably unrealistic assumption that no new mines will be opened going forward, and that the
entire industry will just grind to a halt once the last mine is mined out.!
A more detailed study can be expected to produce a more nuanced profile of an industry wind-down that is sized
and timed to match the regeneration of capital, energy, jobs and ecosystems.!
OPEX and Cash for Capital Splits (Debt, Taxes, Equity)!
This Study was not able to find publicly available data on operating expenses in the coal industry. Apparently mining
costs are idiosyncratic to each mine. So a proper modeling of OPEX will likely require a drill down into the actual
costs of actual mining operations.!
In order to build this theoretical illustration of how an evergreen investing architecture can be used to finance a
planned early retirement, this Study assumes without verifying - that the mining costs and overhead allowances
derived from an earlier study of one coal company, James River Coal Company, can be taken as roughly indicative of
gross and net profit margins, before debt and taxes, in the coal industry overall. Again, for the avoidance of doubt,
this assumption is made for convenience. More study is needed to establish more reliable cost profiles.!
Just as more detailed studies of future coal demand and future coal prices may lead to a conclusion that a planned
early retirement of coal cannot be prudently financed using super fiduciary, so, too, a more detailed study of actual
mining and operating costs, and resulting margins of profit, may lead to a similar negative conclusion on the hypothesis of a superfiduciary sponsored planned early retirement of coal.!
See the table on the following page for a profile of modeled costs and cash flows to Debt.!

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Year

Revenues

Mining Costs

Gross Margin

Overhead

Net Profit

42,989

(37,382)

5,607

(2,804)

2,804

41,490

(36,078)

5,412

(2,706)

2,706

44,245

(38,474)

5,771

(2,886)

2,886

47,117

(40,971)

6,146

(3,073)

3,073

48,980

(42,591)

6,389

(3,194)

3,194

50,420

(43,844)

6,577

(3,288)

3,288

52,202

(45,393)

6,809

(3,405)

3,405

53,775

(46,761)

7,014

(3,507)

3,507

55,693

(48,429)

7,264

(3,632)

3,632

10

57,833

(50,289)

7,543

(3,772)

3,772

11

59,496

(51,736)

7,760

(3,880)

3,880

12

61,405

(53,396)

8,009

(4,005)

4,005

13

63,139

(54,903)

8,235

(4,118)

4,118

14

64,970

(56,496)

8,474

(4,237)

4,237

15

66,696

(57,997)

8,699

(4,350)

4,350

16

68,587

(59,641)

8,946

(4,473)

4,473

17

61,143

(53,168)

7,975

(3,998)

3,998

18

19

20

We reiterate, for the avoidance of doubt, that these cost numbers are a convention selected for the sole purpose of
demonstrating how priorities are agreed in the expected cash flows. They must be replaced by more accurate calculations to be derived through further, more detailed study, at the company and mine site levels.!
Prudent Debt. Valuation. Sources and Uses.!
The coal industry is already heavily leveraged, and this Study assumes that these current lenders will be amenable to
continuing their loans, on equivalent terms, to help finance the planned early retirement.!
Debt is sized using a discounted cash flow formula, applying minimum debt service coverage ratios, capped by a
maximum permissible loan-to-value ratio.!

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Since the purpose of this Study is to demonstrate how the evergreen PE architecture can be applied to discharge the
fiduciary burden imposed on superfiduciary equity invested to finance a planned early retirement within 10 years,
the valuation of the US Coal Industry used in this Study is set at the sum of equity plus debt that can be supported by
the associated return/amortization assumptions.!
The Study calculates a maximum permitted Debt of $29 Billion based on a 3.5% interest rate, a 150% minimum debt
service coverage ratio and a 12 year amortization period.!
However, in calculating maximum equity, this Study solved for an 8% fiduciary burden being discharged within 10
years. The purpose is to provide cash for the replacement of jobs and ecosystems from tail earnings. This returns a
maximum equity contribution of $12 Billion. Capping Debt at 70% of total value, allows for a loan of $9 Billion. This
sums to a total enterprise value of $22 Billion.!
More detailed study will be required to determine whether this enterprise valuation is realistic.!
in $Millions
Sources

Uses

Liquidate Marketable Securities

$0

Purchase Public Equity (Market Cap)

$12,897

New Debt

$9,028

Refinance Balance Sheet Debt

$9,028

Business Leadership Group

$0

Stewardship Capital Group

$12,897
$21,925

$21,924

A summary of the amortization of Acquisition Debt and the resulting annual schedule of Free Cash Flow is presented
in the table on the following page.!

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!
Year

Opening

Scheduled

Applied to

Applied to

Ending

Balance

Debt Service

Interest

Principal

Balance

9,028

(934)

(316)

(618)

8,409

8,409

(934)

(294)

(640)

7,770

7,770

(934)

(272)

(662)

7,107

7,107

(934)

(249)

(685)

6,422

6,422

(934)

(225)

(709)

5,712

5,712

(934)

(200)

(734)

4,978

4,978

(934)

(174)

(760)

4,218

4,218

(934)

(148)

(787)

3,431

3,431

(934)

(120)

(814)

2,617

10

2,617

(934)

(92)

(843)

1,775

11

1,775

(934)

(62)

(872)

903

12

903

(934)

(32)

(903)

!
Equity Splits!
Our starting goal for this Case Study is to illustrate, as a theoretical exercise, how an Evergreen PE campaign for taking the US Coal Industry out of the Public Markets Ownership systems and into stewardship hands might work.!
So, in constructing our model, we worked backwards from assumptions about Revenues, OPEX and Debt to calculate
an enterprise value and equity contribution that shows the discharge of a fiduciary burden of 8% calculated on a
bond-equivalent yield basis with a 5% sinking fund assumption, within 10 years.!
To achieve that, we set the cash sweeps at 90% until the fiduciary burden is discharged, at year 10. Then dropped the
allocations to the superfiduciary sponsors to 0%. This is intended to demonstrate through exaggeration how the concept of investing for a superfiduciary purpose empowers superfiduciary sponsors to forego their evergreen upside as
a way of investing proactively in action on climate inaction. In actual practice, there will have to be negotiated
agreement on how the post-burden, cash flows will be split up between superfduciary sponsors, enterprise leadership, workers, the ecosystem, and action on climate inaction, based on the progress actually being made in the construction of a new energy infrastructure that can replace the current fossil-based infrastructure.!
The table on the following page details how the cash sweeps to the superfiduciary sponsors work. Note that what is
not shown is that the cash flows not swept to investors (i.e. the superfiduciary sponsors) is retained by the enterprise
leadership team. Exactly how those funds would be used is a detail still to be worked out through further study.!

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Discharging the Fiduciary Burden!


The concept of fiduciary burden is intended to capture the purpose of a pension or other superfidcuiary investor,
which is to generate current and consistent earnings from investment at least equal to the earnings rate assumed in
the design of the plan, or otherwise to achieve the intended purposes of a governing charter of trust.!
In the US, many pension plans are designed on the assumption that the plan will earn 7.5-8% per year through its
investments. Required employer contribution levels are calculated based on this assumption. The required investment earnings are based on the assumption that the plan maintains a total pool of funds at levels that reflect both
worker earnings and investment earnings at the assumed rates.!

This makes it both possible and desirable to engineer investments that perform more programmatically than opportunistically. The evergreen investment architecture is purpose-built for such an engineered approach to pension investing for the purpose of discharging its fiduciary burden. The table on the following page shows how this investment is being engineered to discharge an 8% fiduciary burden on the invested superfiduciary funds.!

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!
Coupon

Cash to

Surplus to

Sinking

Uncovered

Add to

Pay
Current

Corpus or

Fund

Corpus

Sinking

Upside

Balance

SOP

Fund

Fund

EOP

Liabilities

SOP

Assumed

Sinking

Uncovered

Earnings

Fund

Corpus

on Sinking

Balance

EOP

Year

8%
1,032

1,032

651

12,897

651

651

12,246

1,032

1,032

563

651

12,246

563

39

1,252

11,644

1,032

1,032

724

1,252

11,644

724

75

2,052

10,845

1,032

1,032

893

2,052

10,845

893

123

3,068

9,828

1,032

1,032

1,002

3,068

9,828

1,002

184

4,255

8,642

1,032

1,032

1,087

4,255

8,642

1,087

255

5,597

7,300

1,032

1,032

1,192

5,597

7,300

1,192

336

7,124

5,772

1,032

1,032

1,284

7,124

5,772

1,284

427

8,836

4,061

1,032

1,032

1,396

8,836

4,061

1,396

530

10,762

2,135

1,032

1,032

1,522

10,762

2,135

1,522

646

12,930

10

Reinvesting in a New Energy Infrastructure!


The Case Study assumes that incremental recovery of original investment, per the Fiduciary Burden schedule, above,
will be invested in Renewable Energy projects, such as rooftop solar PV installations, paying a 5% cash on cash return.!
Negotiations After Fiduciary Burden Discharge!
In this Case Study we have modeled no expectations for how cash flows will be shared out after the Fiduciary Burden
has been discharged.!
In a normal evergreen investment, these residual cash flows would be shared out ratably between the super fiduciary
sponsors and the enterprise leadership for as long as the enterprise continued, unless either party decided to negotiate for an early termination and lump sum settlement. Thats what makes the investment evergreen.!
In the Coal Transition case, however, a plan will be worked out as part of the original acquisition strategy for investing these residual cash flows in part to provide incentive compensation to the leadership, in part to provide assistance to the workers, their families and communities in transiting to a new economy, in part to restore the ecosystem after mining activities have stopped, and in part to retire the mines as early as practicable, based on the availability of replacement sources of non-fossil energy.!
The details of these plans are not explored in the Study, but are left to be worked out through further study. !
Legalities!
It can take some time to start a conversation with a spreadsheet. What you are looking for are the key assumptions
behind the modeled expectations that must be given legal meaning and consequence through contracts and other
documents.!

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For each deal a standard set of documents must be customized to the numbers and assumptions expressing the expectations for that investment. The standard set will include!
1. Investment contracts among the superfiduciary sponsors and between the superfiduciaries as a group and with
the enterprise leaders, as well as agreement among the enterprise leadership.!
2. Acquisition contracts and instruments of transfer for real estate, equipment and other property to be used in the
business, tangible and intangible.!
3. Commercial contracts for supplies to the mines, and sales to utilities and other customers!
4. Management contracts and worker agreements!
5. Governmental permits and approvals!
6. Various mining, engineering, marketing and legal opinions and certifications!
Conclusion!
This Case Study is offered as a theoretical exercise, designed to demonstrate how an Evergreen PE strategy can be
applied to finance the planned early retirement of the entire US Coal Industry, using equity funds supplied by pension plans and other superfiduciary investors, and debt supplied by banks.!
The exercise shows that a $22 Billion valuation of the US Coal Industry can be financed using $13 Billion of superfiduciary equity and $9 Billion of bank debt, where the bank debt can be amortized over 12 years, and the fiduciary
burden on super fiduciary equity can be discharged within 10 years, leaving significant time and money available
thereafter for investment in new jobs for displaced workers and he restoration of damaged ecosystems, before the
industry is shut down, as a new, more climate neutral, energy infrastructure is energized to take its place.!
This exercise also shows the need for more and deeper studies to fully explore the limitations and possibilities of this
approach.

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