Consol reworks IPO for its coal assets
Consol Energy Inc. said in an SEC filing Tuesday it priced its CNX Coal Resources Limited Partnership initial public offering of 5 million common units at $15 per common unit.
Consol noted, separately, hedge fund manager Greenlight Capital Inc. entered into a purchase agreement with CNX Coal Resources to purchase 5 million shares at the same $15 per share price in a concurrent private placement transaction.
At the conclusion of the IPO, the public will own a 21.1 percent limited partner interest in CNX Coal Resources and Consol will own a 55.8 percent limited partner interest.
The closing of the concurrent private placement is July 9.
The common units, which began trading on the New York Stock Exchange Wednesday under the ticker symbol CNXC, closed at $15.41, up 41 cents, or 2.73 percent on volume of 3.28 million shares.
The underwriters of the offering have a 30-day option to purchase up to an additional 750,000 common units.
In March, Consol formed the spin-off, which includes its thermal coal operations at its Bailey, Enlow Fork and Harvey mines in Washington and Greene counties and could potentially acquire other assets. According to Consol, the mines are capable of producing 28.5 million tons of high-BTU coal per year. The coal is generally sold to utility companies in the eastern United States and the Northern Appalachian basin.
The announcement represents a reworking of the company’s June 15 IPO for CNXC, which was between $19 and $21 per share. The company said last week it was cutting the price and the public offering, stating it would sell at least 2 million shares to Greenlight.
Coal prices are at a multi-year low, with slack demand from power customers, who are switching to cleaner-burning natural gas.
In a June “Gas Outlet Report” from Pennsylvania Public Utility Commission, the commission noted natural gas deliveries for electric power now represents 24 percent of all gas deliveries for electric generation, up from 3 percent in 1997. While coal continues to maintain the largest portion of all fuels at 35 percent of the state’s power generating capacity, its future is clouded by the fact no new coal-fired projects are being proposed in the commonwealth.
The PUC noted proposed natural gas power projects now represent 94 percent of all proposed generating projects, the remainder of which include nuclear (3 percent), wind (2 percent) and “other” (1 percent).