SunCoke Energy Partners To Buy 75% Stake In Granite City Cokemaking Facility

(RTTNews) - SunCoke Energy Partners, L.P. (SXCP) said it entered into a contribution agreement with its sponsor, SunCoke Energy, Inc. (SXC), to acquire a 75 percent interest in SXC's Granite City, Ill., cokemaking facility for a total transaction value of $245 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.

As per the deal, SunCoke Energy Partners plans to issue approximately $50.6 million of limited partner interest and $1 million of general partner interest to SXC. In addition, SXCP plans to assume and redeem $135 million principal amount of SXC's outstanding 7.625 percent senior notes and expects to pay $5.6 million of accrued interest and $7.7 million of redemption premium in connection therewith.

To fund this debt assumption and redemption, SXCP anticipates raising approximately $200 million of long-term debt via an offering of its 7.375 percent unsecured senior notes. The remaining cash from the debt raised will be used to pre-fund SXC's approximately $45 million obligation to indemnify SXCP for the anticipated cost of an environmental project at Granite City, pay transaction costs, and for general partnership purposes.

The terms of the agreement, and the acquisition of the interests in the Granite City Operation, have been approved by the Conflicts Committee of our general partner's Board of Directors, which consists entirely of independent directors.