On Jan. 12, SunCoke Energy Partners LP (NYSE: SXCP) entered into a contribution agreement with its sponsor, SunCoke Energy (NYSE: SXC), to acquire a 75% interest in SXC’s Granite City, Ill., cokemaking facility for a total transaction value of $245m.
The Granite City cokemaking facility, which began operations in 2009, has annual cokemaking capacity of 650,000 tons and produces super-heated steam for power generation. Both the coke and power are provided to United States Steel Corp., owner of a host steel plant, under a long-term take-or-pay contract that expires in 2025. Coke plants bake coal into coke, a purified form of carbon, that is used in the steelmaking process.
“The Granite City facility is an attractive addition to SXCP, diversifying our customer base, contracts and assets,” said Fritz Henderson, Chairman and Chief Executive Officer of SunCoke Energy Partners. “In 2015, we expect this 75 percent interest in the Granite City operations will contribute approximately $30 million to Adjusted EBITDA and add $11 million to $12 million to distributable cash flow, thereby supporting our goal to grow cash distributions per unit by 8 to 10 percent through 2016 via the dropdown of SXC’s existing cokemaking assets alone.”
He added: “We structured the size and financing of this transaction to take advantage of our strong balance sheet and in view of the current market environment. We believe this approach will optimize long-term valuation while not exceeding our targeted debt metrics.”
The close of the Granite City facility acquisition is subject to customary closing conditions for such transactions.
SXCP plans to issue fourth quarter 2014 earnings and 2015 guidance before market opens and host an investor conference call at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Jan. 29.
SunCoke Energy Partners is a publicly-traded master limited partnership that manufactures coke used in the blast furnace production of steel and provides coal handling services to the coke, steel and power industries. Its advanced, heat recovery cokemaking process produces consistently high-quality coke, captures waste heat to generate steam or electricity and reduces environmental impacts. Its coal handling terminals have the collective capacity to blend and transload more than 30 million tons of coal annually.