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Consol Energy could spin off coal assets

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World Coal,

Consol Energy is to spin off its thermal coal business as a master limited partnership (MLP) including its Bailey, Enlow Fork and Harvey mines and the related preparation plant. The company will also look at restructuring the company’s metallurgical coal properties as a subsidiary entity with a view to offering 20% of the subsidiary’s in an initial public offering (IPO) in 2H14.

The subsidiary’s assets would include the Buchanon mine and related preparation plant and its interest in its Western Allegheny Energy joint venture.

The company believes that these moves will help to “bring the value of its thermal and metallurgical coal assets forward, thereby increasing Consol’s net asset value per share,” the company said in a statement.

Separate management teams will be appointed to run each of the new businesses.

An IPO for the MLP would start in mid-2015. Following this, Consol would own the general partner of the MLP, any incentive distribution rights and a majority of the limited partner interests in the MLP.

“These restructuring transactions reaffirm [our] commitment to our coal businesses,” said Nick DeIuliis, President and CEO of Consol Energy. “We will retain control [of the assets] so that we can continue to offer our customers the same reliability that they have come to expect.”

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