CNX Coal Resources and CONSOL Energy announced that the Partnership has acquired an additional 5% undivided interest in the "PAMC"
OREANDA-NEWS. CNX Coal Resources LP (NYSE: CNXC) (the "Partnership") and CONSOL Energy Inc. (NYSE: CNX) (the "Sponsor"), announced that the Partnership has acquired an additional 5% undivided interest in the Pennsylvania Mining Complex ("PAMC") and associated infrastructure from the Sponsor for $88.8 million. The transaction is effective September 30, 2016. The acquisition increased the Partnership's undivided interest in the PAMC to 25%.
CNXC funded the transaction with a combination of available borrowings under its credit facility in the amount of $21.5 million and the issuance of convertible preferred units representing limited partner interests (the "Preferred Units") to the Sponsor valued at $67.3 million. The Preferred Units were issued at a price of $17.01 per unit, a 15% premium to the volume weighted average price of CNXC's common units over the fifteen trading days ending on September 29, 2016. The Preferred Units will pay quarterly distributions in additional Preferred Units or cash, at the Partnership's election, equal to an annual rate of 11.00% of the issue price, subject to certain adjustments. The Partnership has the right to cause the conversion of all outstanding Preferred Units into common units, subject to certain conditions, at any time after September 30, 2019. In addition, the Preferred Units will be convertible into common units, generally on a one-for-one basis, subject to certain adjustments, at the holder's option after September 30, 2017.
"I am very excited about this acquisition as we increase our ownership of the premier coal mining assets in the U.S. These assets are very familiar to our unitholders and this transaction supports our previously outlined growth strategy," said Jimmy Brock, chief executive officer of CNX Coal Resources GP LLC, the General Partner of the Partnership. "With coal markets beginning to recover, we believe the timing is right for us to consummate this acquisition. The transaction has been structured to allow more balance sheet flexibility for CNXC as well as create a larger base of cash flow to support ongoing partnership distributions."
"This is a win-win for both CONSOL Energy and CNX Coal Resources," commented Nicholas J. DeIuliis, president and chief executive officer of CONSOL Energy Inc. "This transaction moves CONSOL one step closer to executing our strategic goal of fully separating the coal and gas businesses, while generating cash proceeds from the sale. All in, this deal strengthens CNXC's balance sheet and liquidity position, while benefitting CONSOL."
The terms of the acquisition and financing were approved by the conflicts committee of the board of directors of CNX Coal Resources GP LLC. Evercore acted as the financial advisor and Andrews Kurth Kenyon LLP acted as the legal advisor to the conflicts committee. Stifel, Nicolaus and Company, Incorporated acted as financial advisor to the management teams of the Sponsor and the Partnership. Latham & Watkins LLP acted as legal counsel to the Sponsor.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active thermal coal operations in Pennsylvania. Its assets include, after the closing of the acquisition, a 25% undivided interest in and operational control over, the PAMC, which consists of three underground mines and related infrastructure.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index.