Vectren announced Tuesday it has reached an agreement to sell its wholly owned coal mining subsidiary to Sunrise Coal.
Vectren Fuels owns three underground coal mines in southwestern Indiana, including two mines in Oaktown and one in Petersburg.
Both Oaktown mines are operated by Black Panther Mining, while the Petersburg mine is operated by Five Star Mining, Inc.
Collectively, the three mines employ approximately 850 contract miners.
"Given our company's emphasis on growing our infrastructure and energy services businesses, now is the right time for us to divest of these commodity-based assets. Sunrise Coal is a logical buyer that is already an active participant in the coal mining industry, specifically in the Illinois Basin and will put additional capital to work to continue to grow the overall business," said Carl Chapman, Vectren's chairman, president and CEO.
"I am very pleased Sunrise Coal has advised us they have already established plans to promptly conduct job fairs at which the contract miners currently employed by Black Panther and Five Star will be considered for employment at the mines. These contract miners should be very well situated given the combined workforce needs of the mines being sold by Vectren Fuels and the overall available workforce of miners in Southwest Indiana," Chapman said. "We're confident the transition will go smoothly for the existing customers of Vectren Fuels, including Vectren's electric utility, and that Sunrise Coal will maintain the excellent level of service our coal customers have come to expect."
The sales price is $296-million in cash, plus an estimated $20-million change in working capital from December 31, 2013, until the transaction is closed.
Closing is expected in the third quarter of 2014.
The after-tax net proceeds from the sale are estimated to be approximately $280-million.
The proceeds will be used to retire $200-million in outstanding Vectren Capital bank term loans and pay down outstanding short-term debt.
The transaction is expected to result in a second quarter book loss of approximately $20 to $22-million after tax or $0.24 to $0.26 per share.
Following prior sales of its retail gas marketing and wholesale gas marketing businesses in 2011 and 2013, respectively, once the sale of Vectren Fuels is closed, the company will have fully exited its nonutility commodity-related businesses.
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