Royal Energy takes first step to control coal producer Rhino

On Jan. 21, Royal Energy Resources (OTCQB: ROYE) entered into a Securities Purchase Agreement with Wexford Capital LP and certain of its affiliates under which Royal agreed to purchase a controlling interest in coal producer Rhino Resource Partners LP (OTCQB: RHNO) in two separate transactions.

Under the agreement, Royal purchased 6,769,112 Common Units of Rhino from three holders for total consideration of $3.5 million. The Common Units purchased by Royal represent approximately 40% of the issued and outstanding Common Units of Rhino, and 23.1% of the total outstanding Common Units and Subordinated Units. The Subordinated Units are convertible into Common Units on a one for one basis upon the occurrence of certain conditions. 

At a second closing, to be held upon the satisfaction or waiver of certain conditions, but no later than sixty days after Jan. 21, Royal has agreed to purchase Rhino GP LLC, and 9,455,252 Subordinated Units of Rhino from two holders for aggregate consideration of $1 million. The Subordinated Units to be purchased by Royal represent approximately 76.5% of the issued and outstanding Subordinated Units of Rhino, and when combined with the Common Units already owned by Royal, will result in Royal owning approximately 55.4% of the outstanding units of Rhino. Rhino GP is the general partner of Rhino, and in that capacity controls Rhino. 

William Tuorto, Royal’s Chairman and Chief Executive Officer, said in a Jan. 25 statement: “We are extremely pleased with our investment in Rhino, a company with significant value assets, as compared to its current debt position. We are currently working with Rhino’s management to optimize its assets and operations for current market conditions. Our goal, ultimately, is to increase Rhino’s profitability and resume distributions to the unit-holders.”

Royal Energy Resources said it is focused on the acquisition of coal, gas and renewable energy assets that are profitable at current distressed prices.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.