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Consol’s coal spin-out launches $350m debt offering

23rd October 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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TORONTO (miningweekly.com) – Consol Energy’s new subsidiary Consol Mining, which will hold the parent’s coal assets following the spin-out of the coal business into a new separate entity, plans to raise $350-million in debt.

The Delaware-incorporated entity said that, subject to market and other conditions, it intends to offer and sell $350-million of senior secured second lien notes, due in 2025, in a private offering to eligible purchasers, who will pay interest semi-annually in arrears.

The company intends to use the proceeds, together with borrowings under its term loan facilities and its revolving credit facility – to be entered into on the separation date – to make a payment to Consol Energy in terms of the conditions of the separation, to refinance existing indebtedness of CNX Coal Resources LP under its revolving credit facility, to pay related fees and expenses and to otherwise fund the company's working capital needs and general corporate purposes. 

Meanwhile, Consol Energy recently published its preliminary third-quarter results to give current and prospective investors more insight into its affairs as it embarked on a series of financings in connection with the business separation, calling for a net loss attributable to Consol Energy shareholders, for the quarter ended September 30, of between $36-million and $14-million. Net income attributable to Consol Energy’s shareholders, for the same period of 2016, was $25-million.

Total revenues for the quarter are expected to range between $650-million and $700-million, compared with total revenues for the comparable quarter of 2016, which were $746-million.

Consol in July filed a registration statement with the US Securities and Exchange Commission to spin off a public company that would be in charge of the Bailey, Enlow Fork and Harvey coal mines, in south-western Pennsylvania; as well as a coal preparation plant; the Baltimore coal export terminal; and undeveloped reserves in Appalachia and the Illinois basin, among other assets and liabilities.

The new firm will also take over Consol Energy’s 25% interest in CNX Coal Resources Limited Partnership, a spin-out Consol completed in 2015, which holds a 25% interest in the south-western Pennsylvania mine complex.

The remaining oil and gas business will operate under a new name, while the mining company will trade under Consol Energy. Shareholders of the current Consol will get common shares in the new coal company.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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