CONSOL Energy Inc., CONSOL Coal Resource LP enter into merger agreement

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CONSOL Energy Inc. (CEIX), a producer and exporter of high-Btu bituminous thermal and crossover metallurgical coal based in Canonsburg, announced last week that it will acquire all of the publicly held common units of CONSOL Coal Resources LP (CCR).

CCR is a master limited partnership formed in 2015 to manage and further develop all of the CEIX active coal operations in Pennsylvania.

The all-stock transaction is valued at approximately $34.4 million, based on the most recent closing price of CEIX common stock shares.

“We are extremely excited to announce this transaction, as we believe it will provide significant benefits for both CEIX and CCR stakeholders” CEIX President and CEO Jimmy Brock said. “We firmly believe these two companies are a much healthier entity once consolidated than they would be on a standalone basis, regardless of the circumstance.”

“Simplifying the structure will bring immediate benefits to the combined entity such as improving its consolidated credit metrics, creating financial flexibility and eliminating dual public company costs,” Brock said. “In the longer term, we expect this transaction will improve the creditworthiness of the combined entity, while also enhancing capital market access and trading liquidity. Finally, this merger accelerates our ability to return capital to our shareholders.”

CCR’s assets include a 25 percent undivided interest in, and operational control over, the Pennsylvania Mining Complex, the CEIX flagship operation, which consists of three underground mines—Bailey, Enlow Fork and Harvey—and related infrastructure. For its ownership interest, CCR effectively produces 7.1 million tons of high Btu North Appalachian thermal coal.

Under the merger agreement, which is expected to close at the end of the first quarter of 2021, CEIX will acquire roughly 10.9 million outstanding CCR common units it does not already own at a fixed exchange ratio of 0.73 shares of CEIX common stock for each publicly held CCR common unit.