TECO Energy (NYSE: TE), in reporting first quarter results on April 28, said that its TECO Coal unit in Central Appalachia, which is subject to a pending sale deal, did worse in the latest quarter.
TECO Energy President and Chief Executive Officer John Ramil said: “We are off to a good start with our utilities this year. New Mexico Gas had good results despite one of the mildest winters in recent years, and our Florida utilities enjoyed a growing economy and customer growth well above national averages. Despite the delay in closing the sale of TECO Coal, we remain committed to exiting the coal business. We believe that working with Cambrian Coal to complete this transaction is the most expedient method of exiting this business.”
As a result of the previously announced agreement to sell TECO Coal, those operations were classified as discontinued operations effective in the third quarter of 2014.
The first quarter 2015 loss in discontinued operations of $5.8 million consisted of the TECO Coal loss from operations and a favorable tax adjustment recorded in the Other (net) segment. The first-quarter loss from operations was driven by coal sales of 0.9 million tons, compared with 1.3 million tons sold in the same period in 2014. The lower tons reflect the harsh winter weather, which reduced production and caused rail service interruptions. In 2015, first-quarter results also reflect selling prices and costs associated with reductions in personnel and steps taken in advance of closing the sale of the company.
TECO Energy had announced on April 20 that on April 17 it entered into a fourth amendment of its agreement with Cambrian Coal, a member of the Booth Energy group, to modify the terms of the October 2014 Securities Purchase Agreement (SPA) related to the sale of TECO Coal. This fourth amendment extended the closing date to June 5. The total sales price remains $140 million: including future contingent consideration of $60 million if certain coal benchmark prices reach certain levels over the next five years. The $80 million cash base purchase price is subject to post-closing adjustments.