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TULSA, Okla. (AP) â¿¿ Alliance Resource Partners LP said Thursday it will invest $400 million to $525 million over three or four years in a coal-mining operation under construction in Illinois.
The deal includes coal producer Alliance taking an ownership stake in White Oak Resources LLC and buying and leasing back reserves and surface rights. Alliance is investing $69.5 million at closing.
Alliance said the deal will add to earnings and distributable cash flow once production begins â¿¿ in about 2014 â¿¿ at a new mine near McLeansboro, Ill.
The company said it will invest between $150 million and $275 million for preferred stock that will give it essentially all of White Oak's distributable cash until Alliance hits an undisclosed rate of return on its investment. After that it will get rights to between 20 and 40 percent of the distributable cash generated by the project.
Alliance also will commit $140 million to acquire coal reserves, which it will lease back to White Oak for royalty payments.
The company also committed up to $110 million to buy coal-handling facilities, and it will give White Oak up to $100 million in backstop financing until White Oak can get its own financing for mining equipment.
Alliance shares fell $2.10, or 3 percent, to close at $67.97 before the White Oak deal was announced.