Cloud Peak IPO terms released

FOUR months after filing a plan with federal financial regulators, Rio Tinto coal arm Cloud Peak Energy has prepared estimated terms for its initial public offering.
Cloud Peak IPO terms released Cloud Peak IPO terms released Cloud Peak IPO terms released Cloud Peak IPO terms released Cloud Peak IPO terms released

Spring Creek mine. Image courtesy of Rio Tinto Energy America.

Donna Schmidt

According to Dow Jones Newswires, at least 30.6 million shares will be offered, at $US16-18 each.

The maximum size of the offering was recently lifted 25% to $650 million. When the producer filed the IPO with the United States Securities and Exchange Commission in August, it initially said the value would be up to $500 million.

Cloud Peak will own 52% of the assets, which are mostly comprised of Rio Tinto's western US coal properties, and fund the acquisition with its proceeds. Rio Tinto will hold the rest, the news service said.

The figures differ significantly from a Bloomberg report last week that quoted two anonymous sources projecting a $1 billion offering to be split evenly between shares and bonds.

Since 2007, Rio has announced $7 billion in asset sales to help repay debt from its purchase of Canadian aluminum producer Alcan, which it acquired in a $38.1 million deal. In June, it reported it would raise $21 billion through selling shares as well as the creation of an iron ore venture with BHP Billiton.

Rio spun off Cloud Peak in August 2008. The division controls four mines in Wyoming and Montana – Spring Creek, Cordero Rojo, Antelope and half of Decker – which produce thermal product from the Powder River Basin. The fifth operation, Jacobs Ranch, was sold to Arch Coal in March for $761 million.

According to Bloomberg, the four mines produced 97.1 million tons and had $1.24 billion in sales in 2008. The newswire also noted that Alpha Natural Resources was to purchase Cloud Peak in May 2009, but instead took over Maryland producer Foundation Coal.

Rio Tinto reported $190.1 million in earnings for the first nine months of this year on revenue of $1.06 billion.

Cloud Peak says it is the third-largest coal producer in the US.

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