Vectren To Sell Coal Mining Unit To Hallador Energy's Unit For Up To $325 Mln

(RTTNews) - Utility Vectren Corp. (VVC) late Tuesday announced that it has reached an agreement to sell its coal mining unit Vectren Fuels, Inc., to Sunrise Coal, LLC, a subsidiary of coal miner Hallador Energy Co. (HNRG).

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.

In a statement, Hallador said the purchase price is $296 million plus additional working capital adjustments, not to exceed a total of $325 million.

Vectren expects to close the sale in the third quarter of 2014. The after-tax net proceeds from the sale are estimated to be approximately $280 million.

Vectren said 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 or $0.24 to $0.26 per share.

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, LLC, while the Petersburg mine is operated by Five Star Mining, Inc. Collectively, the three mines employ approximately 850 contract miners.

Carl Chapman, Vectren's chairman, president and CEO said, "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."

Vectren noted that once the sale of Vectren Fuels is closed, the company will have fully exited its nonutility commodity-related businesses, following prior sales of its retail gas marketing and wholesale gas marketing businesses in 2011 and 2013, respectively.

Vectren stock settled on Tuesday at $42.21, down $0.29 or 0.68 percent. Hallador stock closed Tuesday's trading at $9.98, up $0.49 or 5.16 percent.