Share prices of
SunCoke Energy Inc.
) inched up 0.94% to $17.16 on Oct 1, 2013 just after the
acquisition of Kanawha River Terminals LLC (KRT) by
SunCoke Energy Partners, L.P.
). SunCoke Energy Partners is a subsidiary of SunCoke Energy Inc.
JAMES RIVER CL (JRCC): Free Stock Analysis
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SUNCOKE ENERGY (SXC): Free Stock Analysis
SUNCOKE ENERGY (SXCP): Free Stock Analysis
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SunCoke Energy Partners took over 100% interest in Kanawha River
Terminals from Traxys North America LLC for $86 million. The deal
was financed by a combination of available cash and existing
revolving credit facility. The partnership intends to maintain
KRT's current operations and retain its existing staff.
The deal is immediately accretive to earnings and cash flows of
the publicly-traded master limited partnership. On an annual
basis, the operations of KRT are expected to contribute $12
million to earnings before interest tax depreciation and
amortization (EBITDA) and $6 million or 18 cents per unit to the
distributable cash flow.
KRT is a leading metallurgical and thermal coal blending and
handling terminal service provider with a collective capacity to
blend and transload more than 30 million tons of coal on an
annual basis. KRT can deliver products to U.S. ports in the
Gulf Coast, East Coast and Great Lakes due to its strategic river
locations and convenient access to highways and railroads.
This is the second back-to-back acquisition made by the
partnership in the recent past. On Aug 30, 2013, the partnership
completed the acquisition of Lakeshore Coal Handling Corp. for
$28.6 million. The deal would contribute $5 million to EBITDA and
$4 million or $12 cents per unit to distributable cash flow on an
annualized basis. Since Aug 30, 2013, SunCoke Energy Inc. has
experienced a share price surge of 9.7%.
SunCoke Energy Partners manufactures coke used in the blast
furnace production of steel and provides coal handling services
to the coke, steel and power industries. The current acquisition
would help the partnership in transporting its coke and coal to
SunCoke Energy Inc. has witnessed a steady rise in share prices,
while successful acquisitions have contributed to the company's
EBITDA and distributable cash flow. Also, the recent 10-year
extension of its existing agreement with steel making giant
) for the supply of 1.22 million tons of metallurgical coke
annually is a major catalyst. Supported by strong fundamentals,
the company presently has a short-term Zacks Rank #2 (Buy). We
James River Coal Co.
) in the space with a Zacks Rank #2.