The deal, which should be completed by September 1, will represent a material expansion for SunCoke, as the Convent facility is one of the largest export terminals on the US Gulf Coast and provides strategic access to seaborne markets for coal and other industrial materials.
The terminal has direct rail access and the current capability to ship some 10 million tonnes of coal annually from low-cost Illinois Basin coal producers.
The facility is supported by long-term contracts with volume commitments covering substantially all of its current capacity.
A $US100 million capital investment has modernised and increased efficiency at the facility and when augmented with an additional $US20 million in pre-funded investment, will expand capacity to 15MMtpa and strengthen the terminal’s competitive profile.
“This acquisition will represent a compelling strategic fit by adding a preeminent export asset to our coal logistics business,” SunCoke chairman Fritz Henderson said.
He said the transaction should generate revenue from day one.
Cline Group founder Christopher Cline said he was extremely proud of what the Convent team has accomplished over the past four years, and he was looking forward to seeing the Covenant terminal complementing “an already compelling business model”
SunCoke expects the Convent marine terminal acquisition to contribute an estimated $US60 million to earnings before tax in 2016.
The $US412 million purchase price includes $US82.4 million in shares to be issued to Cline,
$US115 million of seller financing at competitive market terms and $US214.6 million to be initially funded with cash and revolver facilities.
SunCoke manufactures high-quality coke used in the blast furnace production of steel and provides coal handling services to the coke, steel and power industries.
Its coal handling terminals have the collective capacity to blend and load more than 30MMtpa of coal each year and are strategically located to reach key US ports in the Gulf Coast, East Coast and Great Lakes regions.