News: UNV Universal Coal Responds To Terracom Announcement, page-24

You can't ignore debt. You can deal with it in a number of ways. For example, lets use Enterprise Value at a calculation of 3 times earnings (seems reasonably though in all likelihood its probably lower).

TER = 3 x $94m = $286m
UNV = 3 x $51m = $151m

Now that looks good from TER's perspective, but enterprise value is Market Cap PLUS debt so to get the shareholders ownership % of that amount, you need to deduct net debt (now UNV have net cash but I won't increase theirs up for now). I think TER's net debt is somewhere around $200m from memory so actually the valuation aspects are:

TER = $286m less $200m = $86m
UNV - $151m

So in essence and being fair across EVERYTHING that both sides of the table bring to the equation (and that includes debt), even at a 50/50 split, this is still undervaluing UNV and overvaluing what TER bring to the table.