Arch Coal Inc (NYSE:ACI) Sells Utah-Based Coal Mines; Investors Positive

Flavia Carruth - July 24, 2013

Boston, MA 07/24/2013 (wallstreetpr) – Arch Coal Inc (NYSE:ACI) had sold a group of thermal coal pits situated in the state of Utah to a private company, Bowie Resources.

The said deal is valued at around $435 million.

The company said that it sold its coal blocks because it aims to fabricate its metallurgical coal biz and concentrate on affordable thermal procedures.

A novel JV deal between Bowie Resources and commodity dealer Trafigura’s hedge fund division Galena will get hold of Arch’s completely possessed arm Canyon Fuel Co, comprising the Skywall, Sufco as well as Dugout Canyon thermal coal pits in the state of Utah.

As per reports, Canyon Fuel has 725 people working with it.

Trafigura will encompass special promotion rights for the said JV Bowie Resource Partners (BRP) that will have twelve monthly manufacturing capacitance of around 15-17 million tonnes of thermal coal and a labor force of 1,100, the report added up.

Galena’s PE Resource Fund will act as a minority investor, investing $104 million in the novel firm.

“In total, we consider this deal as a bit of a dual-edged weapon for Arch Coal Inc (NYSE:ACI),” Brean Capital forecaster Lucas Pipes stated in his report.

The contract will enhance Arch Coal Inc’s (NYSE:ACI) liquidity but could slash its EBITDA by around 20%, Brean Capital forecaster Lucas Pipes added up.

The company stated that the sale would permit it to concentrate on promoting its metallurgical coal biz in the coal mining zone of Appalachia and “get the most out of” its thermal coal unit.

The firm will hang on to other thermal mines, comprising West Elk in the state of Colorado that exported around 40% of the 6.7 million short tons it sold during the last year (2012.

In addition, the share holders are confident that the company would back off from its waning trend in the coming time.

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Flavia Carruth

Hi, I am Flavia and have done my MBA with finance as specialization and a Bachelor in Economics with 4 years of experience as Financial Analyst in leading Software Firm. I have passion for article writing, report making and stock market Analysis.

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