Natural Resource Partners L.P.
) acquired a 48.51% general partner stake in OCI Wyoming L.P.'s
Trona operations located in the Green River region of Wyoming.
The deal also includes acquiring 20% of the common shares and all
other preferred shares of OCI Wyoming from subsidiaries of
Anadarko Petroleum Corporation
OCI Wyoming is a premier eco-friendly chemical products
manufacturer in the U.S. The company also operates a soda ash
facility in the Green River province. With demand for soda ash
rising in Asia, Natural Resources' stake buyout is a key
strategic move for the partnership.
Natural Resource Partners shelled out a net $292.5 million for
the acquisition after taking into account normal closing
adjustments. The buyout was financed via a $200 million senior
unsecured term loan issued by ten financial institutions, equity
offerings of $75 million and $16 million in cash and a $1.5
million that was pitched in by the general partner ("GP") of
Natural Resource Partners L.P. The gross purchase price was $310
The arrangement also consists of an earn-out provision which
entails Natural Resource Partners to pay a sum, on a net present
value basis, of $50 million to Anadarko in the event OCI Wyoming
reaches precise revenue targets in the period of three years.
Apart from distributions from its 48.51% interest in OCI
Wyoming, the partnership will receive preferred distribution of
about $4.7 million on an annual basis from its preferred units in
OCI Wyoming. This is expected to be accretive to Natural
Resources Partners' cash flow for 2013 in the range 18 cents per
unit to 22 cents per unit.
Natural Resource Partners has been busy acquiring a string of
unconventional assets. These include the purchase of frac sand
reserves in Wisconsin and a majority stake in the liquids-rich
Marcellus formations. We believe the partnership's
diversification of the asset portfolio will render a stable top
line in the future.
Moreover, the partnership is expected to benefit from a
rebound in the coal market in the near term, especially in
metallurgical coal, owing to visible growth signs in China. Coal
exporters like Natural Resource Partners will stand to gain from
increasing demand for power in China and other emerging
economies. Currently, Natural Resource Partners carries a Zacks
Rank #1 (Strong Buy).
Other coal operators expected to benefit from the coal market
Walter Energy Inc.
Alpha Natural Resources Inc.
Headquartered in Houston Texas, the partnership together with
its subsidiaries, engages in the ownership and management of coal
properties in Appalachia, the Illinois Basin, and the western
United States, as well as lignite reserves in the Gulf Coast
ALPHA NATRL RES (ANR): Free Stock Analysis
ANADARKO PETROL (APC): Free Stock Analysis
NATURAL RSRC LP (NRP): Free Stock Analysis
WALTER ENERGY (WLT): Free Stock Analysis
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