Xinergy Ltd. through its wholly owned subsidiary, Shenendoah Energy, LLC, is pleased to announce that, effective yesterday, it completed the acquisition of the remaining 95% interest of Raven Crest Mining, LLC (“Raven Crest”) that Xinergy does not already own for US$40.0 million in cash, the assumption of US$18.8 million in debt, which was paid upon closing, and a working capital adjustment of approximately US$5.0 million (“the Transaction”). Xinergy had indirectly acquired 5% of Raven Crest in December 2009. The purchase price for the Transaction was financed by the issuance of US$75.0 million of secured notes issued to Marret Asset Management Inc. on behalf of various funds under management (the “Secured Notes”). The Secured Notes are due on April 29, 2015 and pay interest at a rate of 9.75% per annum.
Raven Crest operates surface mines in Boone County, West Virginia and controls approximately 17.0 million tons of coal reserves. The Transaction increases Xinergy’s total reserves by approximately 110%, from approximately 15.7 million tons to approximately 33.0 million tons. Raven Crest produced approximately 800,000 tons of high quality thermal coal in 2009 and generated earnings before taxes interest deprecation and amortization (“EBITDA”) of approximately US$24.0 million.
Raven Crest has approximately 660,000 tons of coal contracted in both 2010 and 2011 at prices of US$93.50 and US$95.00 per ton, respectively.
Mr. Jon Nix, CEO of Xinergy, commented, “We are very pleased to complete this value accretive acquisition that will have an immediate and positive impact on Xinergy’s production profile at such a favourable time in the coal market. As market conditions continue to improve, we look forward to taking advantage of Raven Crest’s short-term and long-term potential to even further expand the Company’s production.”
In combination with its existing sales, the Company has approximately 1.0 million remaining tons contracted in 2010 at a blended average sales price of $92 per ton and over 1.2 million tons contracted in 2011 at a blended average sales price of $104 per ton. Xinergy is currently focused on increasing shareholder value through strategic opportunities to grow the Company by acquiring quality operations that have proven and permitted coal reserves and sales in place. Xinergy continues to develop existing properties that will expand its permitted reserve base that will allow the Company to increase capacity.
In connection with the Transaction, GMP Securities L.P. provided investment banking services and Canaccord Financial Ltd. provided M&A and financial advisory services. Canaccord Financial Ltd. provided the Board of Directors of Xinergy a fairness opinion with respect to the Transaction.