SunCoke Energy Updates 2014 Guidance, Receives Permit to Build New Facility in Kentucky
05/15/2014 - On 9 May 2014, SunCoke Energy Inc. (SXC) closed on its dropdown agreement with SunCoke Energy Partners L.P. (SXCP) to contribute a 33% interest in each of the Haverhill and Middletown cokemaking facilities for total consideration of US$365 million.
SXC continues to hold a 2% interest in both facilities. SXC is the sponsor, general partner with a 2% general partner interest, and largest unitholder of SXCP, holding a 54% limited partnership interest and all the incentive distribution rights.
As part of the total consideration of US$365 million, SXC received US$80 million of SXCP limited partner interest, or 2.7 million common limited partner units, US$3.3 million of general partner interest and US$10.4 million of cash, of which US$7 million was used to pre-fund our obligation related to an environmental remediation project at Haverhill. In addition, SXCP assumed from SXC and subsequently paid down US$99.9 million of our outstanding term loan and completed a tender offer for US$160 million of our 7.625% senior notes, paying a tender premium of US$11.4 million. It anticipates no material immediate tax gain as a result of the transaction structure and forms of consideration.
It reaffirms our full year 2014 consolidated Adjusted EBITDA outlook of US$220 million to US$240 million. However, Adjusted EBITDA attributable to SXC is now expected to be between US$160 million and US$177 million, reflecting the impact of public ownership on an increased portion of Adjusted EBITDA attributable to SXCP.
As a result of the debt extinguishment activities discussed above, it expects to record between US$15 million and US$18 million of additional interest and financing expense attributable to SXCP in second quarter 2014 consolidated results. The impact of these transactions, partly offset by lower taxes, reduces the company’s full year earnings per share outlook to US$0.02 to US$0.24 per share.
Separately, the company has received a final permit to construct and operate a potential new 660,000 ton cokemaking facility near South Shore, Ky. It plans to begin construction only after securing commitments from customers for a substantial portion of the plant’s expected future output.
UPDATED 2014 OUTLOOK
SunCoke’s updated full year 2014 guidance is as follows:
As part of the total consideration of US$365 million, SXC received US$80 million of SXCP limited partner interest, or 2.7 million common limited partner units, US$3.3 million of general partner interest and US$10.4 million of cash, of which US$7 million was used to pre-fund our obligation related to an environmental remediation project at Haverhill. In addition, SXCP assumed from SXC and subsequently paid down US$99.9 million of our outstanding term loan and completed a tender offer for US$160 million of our 7.625% senior notes, paying a tender premium of US$11.4 million. It anticipates no material immediate tax gain as a result of the transaction structure and forms of consideration.
It reaffirms our full year 2014 consolidated Adjusted EBITDA outlook of US$220 million to US$240 million. However, Adjusted EBITDA attributable to SXC is now expected to be between US$160 million and US$177 million, reflecting the impact of public ownership on an increased portion of Adjusted EBITDA attributable to SXCP.
As a result of the debt extinguishment activities discussed above, it expects to record between US$15 million and US$18 million of additional interest and financing expense attributable to SXCP in second quarter 2014 consolidated results. The impact of these transactions, partly offset by lower taxes, reduces the company’s full year earnings per share outlook to US$0.02 to US$0.24 per share.
Separately, the company has received a final permit to construct and operate a potential new 660,000 ton cokemaking facility near South Shore, Ky. It plans to begin construction only after securing commitments from customers for a substantial portion of the plant’s expected future output.
UPDATED 2014 OUTLOOK
SunCoke’s updated full year 2014 guidance is as follows:
- Domestic coke production is expected to be approximately 4.2 million tons
- Coal production is projected to be approximately 1.3 million tons
- Adjusted EBITDA is expected to be between US$220 million and US$240 million on a consolidated basis. Adjusted EBITDA attributable to SXC is expected to be between US$160 million and US$177 million, reflecting the impact of public ownership in SXCP
- Earnings per diluted share attributable to SXC is expected to be between US$0.02 and US$0.24 per diluted share
- Cash generated by operations is expected to be approximately US$160 million
- Capital expenditures are projected to be US$138 million
- The effective tax rate for the full year 2014 is expected to be between 0% and 10%, and the cash tax rate is expected to be between 20% and 28%
