Peabody announces another divestiture
TORONTO (miningweekly.com) – US coal producer Peabody Energy has agreed to sell a subsidiary holding its 5.06% share of the Prairie State Energy Campus to the Wabash Valley Power Association for $57-million.
The deal was the result of a competitive bidding process Peabody had launched in the fourth quarter as part of the company's emphasis on portfolio optimisation and noncore asset divestitures.
Prairie State is a 1 600 MG coal-fired electricity generation plant and neighbouring coal mine in Washington, St Clair and Randolph counties, in Illinois, which started operations in 2012. It is one of the cleanest coal-fuelled plants in the US and the lowest-cost coal plant in one of the world's largest energy and operating reserve markets.
Subject to customary closing adjustments and regulatory approvals, the deal was expected to close before the end of the second quarter.
Peabody advised that it planned to use transaction proceeds for general corporate purposes and/or deleveraging activities, and expected to record a modest gain related to the sale.
The sale was the latest in a series of actions to reshape Peabody's portfolio and increase proceeds through sales of noncore assets, as it dealt with low coal prices and tighter legislation on emissions. The planned sale of the Prairie State interest, along with other recent transactions, would bring total proceeds from asset sales to nearly $500-million since the beginning of the second quarter of 2015.
In the fourth quarter, Peabody entered into a definitive agreement to sell its New Mexico and Colorado assets for $358-million in cash. Peabody said the transaction would bring forward multiple years of cash flows and release the company of about $105-million of liabilities. The sale recently received Hart-Scott-Rodino regulatory approval; the buyer was currently arranging for financing and closing was expected within the first quarter, the company advised.
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