Sunrise Coal Purchases Vectren Fuels For $296M + Additional Working Cap. Not To Exceed $325M Total
Vectren Fuels is a wholly-owned subsidiary of Vectren Corporation
Hallador Energy Company (NASDAQ: HNRG) announced today its wholly-owned subsidiary, Sunrise Coal, LLC has agreed to purchase Vectren Fuels, Inc. (a wholly-owned coal mining subsidiary of Vectren Corporation (NYSE: VVC)).
Vectren Fuels, headquartered in Evansville, Indiana, owns three underground coal mines in southwestern Indiana, including the Oaktown 1 and Oaktown 2 mines in Oaktown, Indiana, and the Prosperity Mine located in Petersburg, Indiana.
The two underground mines in Oaktown, Indiana are seven miles south of Sunrise's Carlisle underground mine. During the last twelve months, the Oaktown mines sold 5.1 million tons of coal, the Prosperity mine sold 1.8 million tons and Sunrise sold 3.2 million tons from the Carlisle mine. Current 2015 coal sales commitments stand at a total of 9.5 million tons.
The purchase price is $296 million plus additional working capital adjustments, not to exceed a total of $325 million. Sunrise is working with its group of banks headed by PNC Bank to secure the necessary financing. Closing is expected to occur around September 1, 2014.
"This acquisition enables Sunrise to mine our War Eagle reserve, which is adjacent to the Oaktown 2 mine, through the Oaktown 2 portal without spending the approximately $150 million in capital expenditures that would otherwise be necessary to develop War Eagle to its full capacity," said Brent Bilsland, Hallador's President and CEO. "Oaktown 1, Oaktown 2, Carlisle and War Eagle will become one large underground complex representing 230 million tons of identified reserves (with 161 million tons controlled reserves), with three portals, two wash plants and two rail facilities. We look forward to working with Vectren in an orderly transition."
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