PITTSBURGH, Oct. 3, 2016 /PRNewswire/ -- CNX Coal
Resources LP (NYSE: CNXC) (the "Partnership") and CONSOL Energy
Inc. (NYSE: CNX) (the "Sponsor"), announced that the Partnership
has acquired an additional 5% undivided interest in the
Pennsylvania Mining Complex ("PAMC") and associated infrastructure
from the Sponsor for $88.8 million.
The transaction is effective September 30,
2016. The acquisition increased the Partnership's undivided
interest in the PAMC 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 (the
"Preferred Units") to the Sponsor 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 September 29, 2016. The Preferred Units will pay
quarterly distributions in additional Preferred Units or cash, at
the Partnership's election, equal to an annual rate of 11.00% of
the issue price, subject to certain adjustments. The Partnership
has the right to cause the conversion of all outstanding Preferred
Units into common units, subject to certain conditions, at any time
after September 30, 2019. In
addition, the Preferred Units will be convertible into common
units, generally on a one-for-one basis, subject to certain
adjustments, at the holder's option after September 30,
2017.
"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 the Partnership. "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 Inc. "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."
The terms of the acquisition and financing were approved by the
conflicts committee of the board of directors of CNX Coal Resources
GP LLC. Evercore acted as the financial advisor and Andrews Kurth
Kenyon LLP acted as the legal advisor to the conflicts committee.
Stifel, Nicolaus and Company, Incorporated acted as financial
advisor to the management teams of the Sponsor and the Partnership.
Latham & Watkins LLP acted as legal counsel to the Sponsor.
Cautionary Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements under federal securities laws that
involve risks and uncertainties that could cause actual results to
differ materially from projected results. Accordingly,
investors should not place undue reliance on forward-looking
statements as a prediction of actual results. The forward-looking
statements may include projections and estimates concerning the
timing and success of specific projects and our future production,
revenues, income and capital spending. When we use the words
"believe," "intend," "expect," "may," "should," "anticipate,"
"could," "estimate," "plan," "predict," "project," or their
negatives, or other similar expressions, the statements which
include those words are usually forward-looking statements. When we
describe strategy that involves risks or uncertainties, we are
making forward-looking statements. The forward-looking statements
in this press release speak only as of the date of this press
release; we disclaim any obligation to update these statements. We
have based these forward-looking statements on our current
expectations and assumptions about future events. While the
management of the Sponsor and the Partnership consider these
expectations and assumptions to be reasonable, they are inherently
subject to significant business, economic, competitive, regulatory
and other risks, contingencies and uncertainties, most of which are
difficult to predict and many of which are beyond the control of
the Sponsor and the Partnership. These risks, contingencies and
uncertainties relate to, among other matters, the following:
generation of sufficient distributable cash flow to support the
payment by the Partnership of minimum quarterly distributions;
changes in coal prices or the costs of mining or transporting coal;
uncertainty in estimating economically recoverable coal reserves
and replacement of reserves; the Partnership's ability to develop
existing coal reserves and successfully execute its mining plans;
changes in general economic conditions, both domestically and
globally; competitive conditions within the coal industry; changes
in the consumption patterns of coal-fired power plants and
steelmakers and other factors affecting the demand for coal by
coal-fired power plants and steelmakers; the availability and price
of coal to the consumer compared to the price of alternative and
competing fuels; competition from the same and alternative energy
sources; energy efficiency and technology trends; the ability of
the Sponsor and the Partnership to successfully implement their
business plans; the price and availability of debt and equity
financing; operating hazards and other risks incidental to coal
mining; major equipment failures and difficulties in obtaining
equipment, parts and raw materials; availability, reliability and
costs of transporting coal; adverse or abnormal geologic
conditions, which may be unforeseen; natural disasters,
weather-related delays, casualty losses and other matters beyond
the control of the Sponsor and the Partnership; interest rates;
labor availability, relations and other workforce factors; defaults
by the Sponsor under the operating agreement and employee services
agreement between the Sponsor and the Partnership; changes in
availability and cost of capital; changes in the Partnership's tax
status; delays in the receipt of, failure to receive or revocation
of necessary governmental permits; defects in title or loss of any
leasehold interests with respect to our properties; the effect of
existing and future laws and government regulations, including the
enforcement and interpretation of environmental laws thereof; the
effect of new or expanded greenhouse gas regulations; the effects
of litigation; and other factors discussed in the Sponsor's and the
Partnership's Annual Reports on Form 10-K under "Risk Factors," as
updated by any subsequent Quarterly Reports on Form 10-Q, which are
on file at the Securities and Exchange Commission.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited
partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and
further develop all of CONSOL's active thermal coal operations in
Pennsylvania. Its assets include, after the closing of the
acquisition, a 25% undivided interest in and operational control
over, the PAMC, which consists of three underground mines and
related infrastructure. More information is available on our
website www.cnxlp.com.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of
the largest independent natural gas exploration, development and
production companies, with operations centered in the major shale
formations of the Appalachian basin. The company deploys an organic
growth strategy focused on developing its substantial resource
base. As of December 31, 2015, CONSOL
Energy had 5.6 trillion cubic feet equivalent of proved natural gas
reserves. CONSOL Energy is a member of the Standard & Poor's
Midcap 400 Index. Additional information may be found at
www.consolenergy.com.
Contacts:
CNX Coal Resources Investor:
Mitesh Thakkar, at (724) 485-3133
and miteshthakkar@cnxlp.com
CONSOL Energy Investor:
Tyler Lewis, at (724) 485-3157 and
tylerlewis@consolenergy.com
Media:
Brian Aiello, at (724) 485-3078 and
brianaiello@consolenergy.com
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SOURCE CNX Coal Resources LP; CONSOL Energy