Coal Mining Company Ramaco Preparing to File for an IPO
October 28 2016 - 12:30PM
Dow Jones News
An Appalachian coal mining company that has yet to produce any
coal is preparing the industry's first initial public offering in
more than a year, at a time when coal prices have been rebounding
sharply.
Ramaco LLC, based in Lexington, Ky., is looking to list shares
early next year, according to people familiar with the matter. It
is actively working with bankers and lawyers on a confidential IPO
filing, these people said.
It isn't clear how the IPO would value the company, or even if
the entire company would be part of the IPO. Companies can file
confidentially for IPOs on U.S. exchanges if they generate less
than $1 billion in annual revenue.
A Ramaco executive told S&P Global Platts in April that the
company was delaying plans to start producing this year unless
there was a market recovery. The company's mines show no history of
producing under Ramaco ownership, according to S&P Global
Platts and Wood Mackenzie.
The coal industry had been stuck in what some thought was a
terminal downturn. Governments want to cut coal consumption to
reduce greenhouse gases and pollution, while a boom in natural-gas
drilling lowered prices of coal's primary competitor.
Overproduction amid tepid global growth also created a glut for the
type of coal used in steelmaking.
But recently mines in China and Australia have throttled back
their output, pinching global supply and helping spark the biggest
rally in global coal since 2011. U.S. prices for metallurgical
coal, the type used in steelmaking that Ramaco plans to mine, have
doubled since August to $212 a metric ton as of Wednesday,
according to S&P Global Platts.
Now, higher prices are changing the outlook for troubled coal
companies world-wide, especially several of the largest U.S. mining
companies that have spent parts of the last year in bankruptcy.
A first-quarter offering would make Ramaco the first coal IPO in
about 18 months and place it among a small but growing group of
energy companies looking to go public amid a broad recovery in
commodity prices.
Extraction Oil & Gas Inc., a Denver-based exploration and
production company, became the first U.S. oil and gas company to go
public in more than two years when it sold 33.3 million shares at
$19 apiece this month. The shares on Friday were down 0.3% at
$22.
Ramaco has coal reserves in Appalachia and Wyoming and could
spin off only some of those assets into a publicly traded company.
Consol Energy Inc. made a similar move a year ago, spinning off
just its operations for mining the type of coal that feeds power
plants.
Ramaco's owners include Yorktown Partners LLC and Energy Capital
Partners. They put in a combined $90 million of equity into the
company in August. It was the third Ramaco investment from
Yorktown.
Ryan Dezember and Maureen Farrell contributed to this
article
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
October 28, 2016 12:15 ET (16:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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