CONSOL Energy Inc. has entered into an agreement for the sale of its Buchanan mine in southwestern Virginia and certain other metallurgical coal reserves to Coronado IV LLC for total consideration to CONSOL of US$420 million, including US$398 million cash payable at the closing.
The transaction is not subject to a financing condition and is being funded by Energy and Minerals Group (EMG), which is the management company for a series of specialised private equity funds.
"This is another significant event in the execution of CONSOL Energy's strategy, as well as a meaningful step in continuing to strengthen our balance sheet," said Nicholas J. DeIuliis, President and CEO. "The Buchanan mine fits into Coronado's portfolio as a pure play metallurgical coal producer, and, in the end, this transaction bolsters the strategic position of both companies."
Also included in the transaction are CONSOL Energy's idled Amonate mine in southern West Virginia and southwestern Virginia, its greenfield Russell County coal reserves in southwestern Virginia and its greenfield Pangburn-Shaner-Fallowfield coal reserves in southwestern Pennsylvania.
The transaction includes approximately 400 million short t of proved coal reserves, which includes approximately 88 million short t associated with the Buchanan mine.
The transaction does not include any gas rights, and CONSOL will retain the right to extract and sell gas at the mines and other properties.
The agreement contains customary representations, warranties and covenants, among other provisions, including a customary escrow provision. The completion of the sale is subject to customary conditions, including regulatory approvals. The final purchase price is subject to a limited working capital adjustment.
CONSOL expects to use transaction proceeds in order to pay down debt. The transaction is expected to close in 1Q16.
Also in conjunction with the sale, CONSOL Energy is realigning its dividend policy to further reflect the company's increased emphasis on growth. Beginning with the first declared quarterly dividend after the transaction closes, CONSOL Energy intends to suspend its regular quarterly dividend.
Edited from press release by Harleigh Hobbs
Read the article online at: https://www.worldcoal.com/coal/29022016/consol-energy-to-sell-buchanan-mine-314/