Cliffs Natural Resources Inc. has closed the sale of its remaining coal business, Pinnacle mine in West Virginia and Oak Grove mine in Alabama, to Seneca Coal Resources LLC.
Cliffs values the transaction at closing at US$268 million based on Seneca Coal assuming all liabilities of the business. Additionally, Seneca Coal may pay Cliffs an earn out of up to US$50 million contingent upon the terms of a revenue sharing plan, which extends through the year 2020.
Lourenco Goncalves, Cliffs' Chairman, President and Chief Executive Officer commented: "The sale of Pinnacle and Oak Grove to Seneca Coal marks Cliffs' exit from the coal business, and represents another very important step in the implementation of our US iron ore pellet-centric, environmentally compliant strategy. We are pleased to have found a buyer that was able to agree on a transaction that not only brings real value to Cliffs shareholders, but will also preserve jobs for the exceptional people at these two mines."
Goncalves added: "I commend the Cliffs' coal operations team for an outstanding job achieving great safety, production and quality results, preserving the value of our coal business in light of the many headwinds the industry has faced over this past year. This transaction was only made possible due to the high quality of our people at the coal mines, and I wish them the very best as they move forward with Seneca Coal."
According to Cliffs, the transaction closed upon signing of the deal on 22 December 2015.
The company stated that the deal structure is a sale of the equity interests of Cliffs' remaining coal business, which includes the legal entities of Cliffs North American Coal LLC; Pinnacle Mining Co., LLC; Pinnacle Land Co. LLC; Oak Grove Resources, LLC Oak Grove Land Co. LLC; and Beard Pinnacle LLC.
Edited from press release by Harleigh Hobbs
Read the article online at: https://www.worldcoal.com/coal/23122015/cliffs-natural-resources-closes-sale-of-its-remaining-us-coal-operations-337/