Teco extends date for coal unit sale to Cambrian

OREANDA-NEWS. March 25, 2015. Teco Energy has extended its effort to sell its steam and metallurgical coal production subsidiary to Cambrian Coal for a third time to give Cambrian more time to finalize financing for the deal that could be valued at up to \\$140mn.

The companies have agreed to extend the closing date for Teco Coal's sale to 24 April. An amendment was updated to allow Teco to terminate the agreement by 17 April if Cambrian has not provided copies of financing commitment letters that show it will have enough funds to complete the transaction.

The deal had already been extended twice, and the price cut to a maximum of \\$140mn, since Teco first agreed in October 2014 to sell its coal business to Cambrian. The transaction initially was to close by 31 December and be priced at up to \\$170mn if coal prices hit certain levels over the next five years. But the parties extended the agreement to 20 February shortly before its deadline to give Cambrian more time to meet closing conditions.

The companies pushed off the closing again last month, to 13 March, and cut the transaction price because of weakening coal markets.

The sale is dependent on specific closing conditions, including Cambrian's obtaining financing in order to pay part of the purchase price. All of the adjusted contracts have given Teco the option of considering other bids.

The sales price set in February includes an \\$80mn cash base price plus future payments of up to \\$60mn if Asian metallurgical coal benchmark prices reach certain levels over the next five years.

Teco recently cut its coal production by about 1mn short tons (900,000 metric tonnes) because of poor market conditions. Last year, the coal unit sustained a \\$5.6mn loss on sales of 5.5mn st of steam and coking coal, down from a profit of \\$9mn on sales of 5.8mn st in 2013.

Teco owns mining assets in Tennessee, Kentucky and Virginia, including subsidiaries Clinton Elkhorn Mining, Perry County Coal, Pike-Letcher Land and Premier Elkhorn Coal.