SunCoke Energy closed on its agreement with SunCoke Energy Partners, to contribute a 75 percent interest in its Granite City, Illinois., cokemaking facility for a total transaction value of $245 million.

SXC is the sponsor, general partner with a 2 percent general partner interest, and largest unitholder of SXCP.

Highlights

  • Increased limited partnership interest in SunCoke Energy Partners, L.P. to 56 percent and reduced SunCoke Energy’s debt by $135 million

As a result of this agreement, SXC received a total transaction value of $245 million, including $1 million of general partner interest and $50.6 million of SXCP limited partner interest, which raised SXC’s total limited partner interest in SXCP from 54 percent to 56 percent. SXC continues to hold all of SXCP’s incentive distribution rights.

In addition, SXCP assumed $135 million principal amount of SXC’s senior notes. SXCP is expected to call these notes for redemption and expects to pay $5.6 million of accrued interest to the date of redemption and a call premium of $7.7 million. Approximately $45 million of the transaction value will be used to pre-fund SXC’s obligation to indemnify SXCP for the anticipated cost of an environmental project at Granite City.

Total transaction costs, primarily incurred by SXCP and expected to be recognized in first quarter 2015, are approximately $6 million.

The Granite City cokemaking facility, which began operations in 2009, has annual cokemaking capacity of 650,000 tons and produces super-heated steam for power generation. Both the coke and power is provided to United States Steel Corporation under a long-term take-or-pay contract that expires in 2025. In 2014, the Granite City facility produced an estimated 689,000 tons of coke and is expected to contribute $35 million to $40 million to 2014 consolidated Adjusted EBITDA. Ongoing capital expenditures at this facility are estimated to be nearly $4 million in 2014.