The transaction is expected to be complete by April 30, 2010, but is subject to closing conditions including Xinergy’s satisfactory due diligence investigation of Raven Crest.
Company officials said a financing commitment of $75 million had been received from Marret Asset Management to fund the deal. At the transaction’s closing, Raven Crest is anticipated to have $25 million in long-term debt.
Raven’s portfolio includes 17 million tons of recoverable high-quality reserves. The company currently operates surface complexes in Boone County, West Virginia.
"The acquisition of Raven Crest provides us with a great opportunity to obtain an additional quality operation and also has an immediate expected positive impact to our cash flow and earnings,” Xinergy chief executive officer Jon Nix said.
Taking existing sales into consideration, he said the company will have more than 1.3Mt committed in 2010 at an average sales price of $90 per ton, and more than 1Mt committed in 2011 at an average $102/t.
“We also believe that there are additional opportunities to significantly increase our reserve base at Raven Crest that could allow us to possibly expand production in the future," the CEO added.
Nix reiterated Xinergy’s plans, which include value creation for stakeholders by acquiring “immediately accretive” properties that also significantly increase the company’s permitted reserve base which it can bring online as the mark warrants.
“In addition to increasing the cash flow, the Raven Crest acquisition will increase the company's permitted reserves to over 14 million tons and increase its overall reserve base to 31 million tons," he said.
Xinergy’s current active coal properties are located in eastern Kentucky and Alabama.
JMP Coal Holdings, with which Xinergy inked the acquisition, owns 95% of Raven Crest’s membership interests.
The remaining 5% is owned by Shenandoah Energy, which Xinergy acquired in December 2009.