Suncoke is leaving the coal business
Suncoke Energy (NYSE:SXC), the largest independent producer of coke in the Americas, is transferring its coal business to a limited partnership, SunCoke Energy Partners, L.P. (NYSE: SXCP). The initial transaction will consist of a 33 percent interest in the Company's Haverhill and Middletown cokemaking facilities.
A limited partnership structure will have tax advantages.
"We believe this strategy will create significant value for shareholders directly through the proceeds received for the assets dropped down and indirectly through the increase in value of our SXCP ownership interest and higher total cash distributions paid to us, including incentive distribution rights," said Fritz Henderson, SunCoke Energy’s Chairman and Chief Executive Officer.
"In addition, our new flexibility enables us to consider additional restructuring options for our coal mining business. While our coal mining team has delivered significant improvement in productivity, safety and production costs, we believe shareholder value will increase if we exit this business.
The company has retained advisors for strategic review of its entire coal business.
The company's stock was mostly unmoved dropping 0.39% to $22.92.
Suncoke has more than 110 million tons of proven and probable reserves located in Virginia and West Virginia.
Photo of Hanna furnaces from Great Lakes Steel Corporation from Library of Congress