Murray Energy Corp. and Foresight Reserves LP announced April 16 that they have completed the transaction whereby Murray Energy has acquired a significant economic interest in Foresight Energy GP LLC and Foresight Energy LP (NYSE: FELP).
These coal producers said this is a transformative transaction for both Murray Energy and Foresight Energy, which will position these companies for growth and for continued safe, low-cost coal production, utilizing the longwall mining method. Foresight is a major producer of longwall-mined coal in Illinois, while Murray Energy has longwall mines in Illinois, Utah, Ohio and West Virginia.
In connection with this transaction, Murray Energy paid Foresight Reserves a cash consideration of approximately $1.37 billion and acquired:
- a 34% voting interest in FEGP, with 77.5% of the incentive distribution rights;
- approximately 50% of the limited partner interest in FELP, including all of the outstanding subordinated units held by Foresight Reserves; and
- access to certain other coal handling, transportation and transloading facilities.
Chris Cline, the founder of Foresight Energy, will maintain a 66% voting interest in FEGP and an approximate 36% economic interest in FELP. Cline, who lately has been creating a coal mine project position in Canada, will remain actively involved as chairman of the Board of Directors of FEGP and will also join the Board of Directors of Murray Energy.
Robert “Bob” Murray will remain the Chairman, President and Chief Executive Officer of Murray Energy. Robert D. Moore, will remain the Executive Vice President, Chief Financial Officer and Chief Operating Officer of Murray Energy, and will become the Chief Executive Officer of Foresight Energy and join its Board of Directors.
Deutsche Bank Securities acted as financial advisor to Murray Energy. Deutsche Bank and Goldman, Sachs & Co. were joint-book running managers for Murray Energy, with Deutsche Bank acting as lead. Kirkland & Ellis LLP acted as counsel to Murray Energy. Bailey & Glasser LLP and Vinson & Elkins LLP acted as counsel to Foresight Reserves. Cahill Gordon & Reindel LLP acted as counsel to Foresight Energy.
Foresight Energy LP owns four mining complexes where it operates four longwall mines and one continuous miner operation. It has made preliminary capital expenditures to pursue permits for its fifth and sixth longwalls. The four mining complexes can collectively support up to nine longwalls, with a portion of the existing surface infrastructure available to be shared among most of the future longwalls. Williamson, Sugar Camp and Hillsboro are the longwall operations, and Macoupin is currently a continuous miner operation. The Williamson and Hillsboro complexes are each operating with one longwall system and Sugar Camp is operating with two longwalls, the second of which emerged from development in June 2014.