SunCoke Energy Inc.
) subsidiaries SunCoke Energy Partners, L.P. and SunCoke Energy
Partners Finance Corp. have priced $150 million of 7.375% senior
unsecured notes due in 2020. The company primarily intends to
issue notes only to the qualified institutional buyers ("QIPs")
and the non-residential Americans. This note offering will close
on Jan 24, 2013.
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SunCoke Energy earlier also issued senior notes to accumulate
funds for repaying its existing debts and utilizing it for
several other activities. On Jul 21, 2011, the company issued a
total of $400 million of 7.625% senior notes due in 2019. SunCoke
Energy mainly used the net proceeds of the issue for general
corporate purposes and repayment of some inter-company debts.
As of Sep 30, 2012, SunCoke Energy's long term debt to
capitalization ratio was 57%. With the issuance of these new
notes, the company's long term debt to capitalization will
increase by 500 basis points. In third-quarter 2012, SunCoke
Energy paid $12.3 million as interest costs, which was nearly 40%
higher than the year-ago figure. However, the company's stable
cash flow will enables it to service existing debt.
Further, this external funding will not only enable the company
to fund its internal projects but also continue with its
inorganic growth strategy as it did earlier with the acquisition
of 19% interest at the Indiana Harbor facility from an affiliate
of GE Capital, a unit of
General Electric Company
In spite of having higher production level in 2012 and steady
organic as well as inorganic growth strategy, a tough road lies
ahead for SunCoke Energy in 2013 due to increasing competition
from natural gas in the domestic market and softening demand in
overseas market for lower steel production and electricity
generation. It is evident from the company's recent disclosure
that its coke making fleet will do moderate business owing to the
continued weak coal price fundamentals.
Considering these negative near-term factors, SunCoke Energy
currently has a short-term Zacks Rank #5 (Strong Sell).
Another coal company
Natural Resource Partners L.P.
) is currently performing well and carries a short-term Zacks
Rank #1 (Strong Buy).
Arch Coal Inc.
), a peer of the company, currently has a short-term Zacks Rank
Lisle, Illinois-based SunCoke Energy Inc. engages in mining and
producing coal in the Americas. The company offers metallurgical
and thermal coal used in steelmaking facilities. With a market
capitalization of $1.13 billion, the company currently has total
full-time 1,160 employees.