Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, March 23, 1991                   TAG: 9103230205
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: PITTSBURGH                                LENGTH: Medium

COAL SALE COULD NET $1 BILLION FOR DU PONT

Du Pont is negotiating the sale of a 50 percent interest in Consolidation Coal Co., the nation's second-largest coal producer behind Peabody Coal, to Rheinbraun A.G., a subsidiary of German conglomerate RWE A.G.

The Wilmington, Del., chemical and petroleum products company acquired Consolidation when it bought Conoco Inc. in 1981.

Neither company would disclose the purchase price. But James Wilbur, an analyst with Smith Barney, Harris Upham & Co. in New York, estimated Du Pont could receive $1 billion to $1.25 billion from the sale.

He said the money will come in handy because the company has "got a very aggressive spending program under way. They don't want to raise debt," he said.

Consolidation Coal's Buchanan No. 1 mine in Buchanan County is Virginia's top producing coal mine with an output of 2.7 million tons in 1989. That's a million tons more than its nearest rival. Consolidation is the state's fourth largest coal producing company on the basis of that one mine.

Du Pont has increased leverage in recent years, said Patricia O'Brien, an analyst with Barclays de Zoete Wedd in New York.

"I think the biggest benefit is that they will bring quite a bit of cash into the balance sheet and that will provide them some breathing room," she said.

Du Pont said in its latest annual report that the capital expenditure increases reflect an aggressive strategy to strengthen the competitive position of its businesses, partly by establishing global manufacturing capacity and replenishing worldwide petroleum reserves.

Consolidation accounted for about 5 percent of Du Pont's sales last year. The coal business had sales of $1.8 billion and after-tax operating income of $213 million in 1990.

Wilbur said the coal reserves held by Rheinbraun in Germany are of a lower grade than those held by Consolidation.

"With the green and environmental issues gaining importance worldwide, [Rheinbraun] may want to have access to higher quality reserves than the one they already have," he said.

Officials said there would be no major changes at Consolidation if the sale is completed. Consolidation's headquarters is expected to remain in suburban Pittsburgh, and B.R. "Bobby" Brown is expected to continue as president and chief executive.

Staff writer Greg Edwards contributed to this story.