The coal division of Cyprus Amax Minerals (CYM-N) has sold 11 of its Midwestern, and Appalachian coal mines in a transaction aimed at relieving long-term liabilities.
Cyprus sold the operations to Kentucky-based Coal Ventures for US$300 million.
The transaction will consist of US$93 million in cash, plus additional tax benefits, future royalty and equipment payments, and US$140 million in assumption of long-term liabilities.
However, the sale will also require that the company take a pretax charge of US$16 million against its second-quarter earnings.
The coal mines consist of the Mountain Coals operations in Kentucky, the Kanawha and Cannelton properties in West Virginia, the Chinook and Sycamore mines in Indiana, and the Skyline mine in Tennessee. The properties, which employ a total of 1,300 people, produced 16 million tons of coal in 1997 (or 18% of Cyprus’s total coal production).
Cyprus retains coal mines in Wyoming, Colorado, Utah, Illinois and Pennsylvania, as well as a 48% interest in Oakridge Pty., which operates coal mines in Australia.
As a result of the sale, coal reserves for Cyprus will decline to 1.9 billion tons, with revenue slipping to US$920 million. Annual production is now projected at 70 million tons.
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