Comprehensive M&A data with integrated detailed company information

SXC to remove MLP structure
Posted on Wednesday, 06 February 2019 12:03
SunCoke Energy (SXC) is taking another run at SunCoke Energy Partners (SXCP) by tabling an all-scrip offer for the remaining 38.2 per cent not held to eliminate the master limited partnership (MLP) group structure.

The implied offer of USD 15.30 per public unit is a premium of 12.7 per cent to the 30-day weighted average price and of 9.3 per cent to the last unaffected close prior to yesterday’s announcement.

SXC president and chief executive Mike Rippey said in a conference the resulting, larger standalone company will have an increased float and trading liquidity, and lower funding costs will help the execution of “strategic growth initiatives”.

The deal will not trigger a change in control provision, so existing debt will remain unchanged at close, which is due late in the second quarter or early in quarter three.

Overall, the acquisition will eliminate a dual-company structure that” no longer serves its original purposes of providing a more advantageous cost of capital and access to MLP equity markets”.

Rippey stressed this simplified business model should enable SunCoke to reduce leverage quickly to a targeted consolidated ratio of 3.0x gross debt-to-earnings before interest, tax, depreciation and amortisation.

The company will remain focused on coke production as its core operations and on making full use of logistics capabilities, such as its terminal providing access for the seaborne markets.

It will carry on diversifying product mix by handling petroleum coke and aggregates and liquids and as a middle man with regards to steel.

SXCP makes coke used in the blast furnace production of steel and provides export and domestic material handling services to coke, coal, steel, power and other bulk and liquids customers.

The MLP’s logistics terminals have the collective capacity to mix and transload more than 40.00 million tons of material each year, and are strategically located to reach Gulf Coast, East Coast, Great Lakes and international ports.

© Zephus Ltd