TECO Energy (NYSE: TE) said Feb. 5 that it has entered into a second amendment of its agreement with Cambrian Coal Corp., a member of the Booth Energy group, to modify the terms of the Securities Purchase Agreement (SPA) dated as of October 2014 related to the sale of TECO Coal.
Under this second amendment, the total sales price of $140m includes future contingent consideration of $60m if coal benchmark prices reach certain levels over the next five years. The $80m cash base purchase price is subject to post-closing adjustments. The SPA remains subject to the buyer obtaining financing and can be terminated by either party if the specified closing conditions are not met by March 13.
When this deal was first announced last October, the total sales price was $170m, including future contingent consideration of $50m if certain coal benchmark prices reach certain levels over the next five years. The $120m cash base purchase price in that version of the deal was also subject to post-closing adjustments.
TECO Energy CEO John Ramil said in the Feb. 5 statement: “The coal markets have continued to weaken for a number of months now. We believe that the new amended agreement reflects the fair value of TECO Coal in the current markets, and allows us to execute our strategy to exit the coal business in an expeditious manner.”
TECO Energy’s fourth quarter and full-year 2014 results will reflect an additional non-cash, after-tax impairment charge of about $11m in discontinued operations.
TECO Energy is a holding company with regulated electric and gas utilities in Florida and New Mexico. TECO Coal owns and operates coal-production facilities mainly in eastern Kentucky, and also in nearby Tennessee and Virginia. Booth Energy is controlled by coal operator Jim Booth, a longtime veteran of the Central Appalachia coal industry.