CNX Coal Resources LP (NYSE: CNXC) and CONSOL Energy Inc. (NYSE: CNX) announced Oct. 3 that CNX Coal has acquired an additional 5% undivided interest in the Pennsylvania Mining Complex (PAMC) and associated infrastructure from CONSOL for $88.8 million.
The transaction is effective Sept. 30. The acquisition increased the CNX Coal undivided interest in the PAMC, which consists of three Pittsburgh-seam longwall mines, to 25%.
CNXC funded the transaction with a combination of available borrowings under its credit facility in the amount of $21.5 million and the issuance of convertible preferred units representing limited partner interests to CONSOL valued at $67.3 million. The Preferred Units were issued at a price of $17.01 per unit, a 15% premium to the volume weighted average price of CNXC’s common units over the fifteen trading days ending on Sept. 29.
“I am very excited about this acquisition as we increase our ownership of the premier coal mining assets in the U.S. These assets are very familiar to our unitholders and this transaction supports our previously outlined growth strategy,” said Jimmy Brock, chief executive officer of CNX Coal Resources GP LLC, the General Partner of CNX Coal. “With coal markets beginning to recover, we believe the timing is right for us to consummate this acquisition. The transaction has been structured to allow more balance sheet flexibility for CNXC as well as create a larger base of cash flow to support ongoing partnership distributions.”
“This is a win-win for both CONSOL Energy and CNX Coal Resources,” commented Nicholas J. DeIuliis, president and chief executive officer of CONSOL Energy. “This transaction moves CONSOL one step closer to executing our strategic goal of fully separating the coal and gas businesses, while generating cash proceeds from the sale. All in, this deal strengthens CNXC’s balance sheet and liquidity position, while benefitting CONSOL.”