SunCoke Energy Partners LP (NYSE: SXCP) said Aug. 6 that a wholly-owned subsidiary executed a definitive agreement to acquire 100% of the ownership interest in Kanawha River Terminals LLC (KRT) for $86m.
KRT, which operates river coal terminals, is wholly-owned by Traxys North America LLC, an international financing, marketing, distribution and trading company. This transaction is subject to regulatory approval and customary closing conditions and is expected to close in fourth quarter 2013. SXCP plans to finance this acquisition with a combination of available cash and its existing revolving credit facility.
KRT is a leading metallurgical and thermal coal blending/handling terminal service provider with the collective capacity to blend and transload more than 30 million tons of coal annually.
KRT owns four coal handling facilities, the largest of which is the Ceredo Terminal located on the Ohio River in West Virginia. This terminal has both inbound and outbound rail logistics provided by CSX Transportation and Norfolk Southern and the capability to offload and load barges. As a result, the Ceredo terminal is able to serve both domestic and international export markets.
KRT’s other coal handling facilities are located on the Big Sandy and Kanawha Rivers, as well as on Kentucky Highway 1185 near Louisa, Ky. In addition, KRT owns an idled liquids terminal on the Ohio River that has more than four million gallons of liquid storage capacity.
With its strategic river locations and convenient access to highways and railroads, KRT can deliver products to all U.S. ports on the Gulf Coast, East Coast and Great Lakes, SunCoke said.
“KRT is an excellent strategic fit with SXCP and advances our position in coal logistics,” said Fritz Henderson, Chairman and CEO of SXCP. “With this acquisition, we further integrate our cokemaking business with coal handling operations that currently support our Middletown and Granite City cokemaking facilities. We also will broaden our customer base to serve companies in the coal, steel and public utility industries. We anticipate KRT’s operations will be immediately accretive and contribute to future earnings and distributable cash flow growth.”
In 2013, KRT is projected to handle approximately 15 million tons of coal, 56% of which is anticipated to be metallurgical coal. Based on a preliminary outlook and anticipated financing plan, KRTs operations are expected to be accretive to SXCP’s distributable cash flow by approximately $6m on an annualized basis. This contribution is in addition to the anticipated increase in distributable cash flow from SXCP’s previously announced acquisition of Lakeshore Coal Handling Corp., expected to close later in the third quarter.
SunCoke Energy Partners is a publicly-traded master limited partnership, which manufactures coke used in the blast furnace production of steel. Its General Partner is a wholly owned subsidiary of SunCoke Energy (NYSE: SXC), the largest independent producer of coke in the Americas.