Dec. 5, 2013
/PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it has closed on its previously announced agreement to sell its Consolidation Coal Company (CCC) subsidiary, which includes all five of its longwall coal mines in
, to a subsidiary of Murray Energy Corporation (Murray Energy) for
in value. The transaction was originally announced on
October 28, 2013
"The completion of this complex transaction this year," commented
J. Brett Harvey
, chairman and CEO, "enables us to enter 2014 with our focus of achieving our gas growth production targets of 210–225 Bcfe for 2014 and 30% annual gas production growth in 2015 and 2016."
The total consideration paid in the transaction includes
in cash paid at the closing and future payments expected to total nearly
in value resulting from the retention of a royalty on select reserves and tolling fees at CONSOL's Baltimore Terminal. CONSOL Energy is also significantly de-levering its balance sheet in the transaction, with Murray Energy acquiring
of CONSOL balance sheet liabilities. Additionally, Murray Energy is acquiring CONSOL's UMWA 1974 Pension Trust obligations, which have a present value of approximately
. The cash purchase price is subject to a working capital adjustment, which is expected to be immaterial.
CONSOL Energy expects to record approximately
of pre-tax gain during the fourth quarter as a result of the transaction. The transaction is expected to generate a cash tax benefit to CONSOL Energy. In connection with the transaction, the company expects to reduce its administrative expenses by approximately
In connection with the closing of the transaction, for a transitional period CONSOL Energy will either guaranty certain of the commercial liabilities being assumed by Murray Energy in the transaction or will become the direct payee of Murray Energy for future payments. The value of the guaranties which CONSOL Energy will recognize in its financial statements is not expected to be material to the results of operations or the financial condition of CONSOL Energy.