TECO Energy said this week that it has closed on the sale of its coal-mining subsidiary, TECO Coal LLC, to Cambrian Coal Corporation, a Booth Energy company.
While the sales agreement did not involve an upfront purchase payment, it includes future contingent consideration of $60 million if certain coal benchmark prices reach specific levels in the next five years. TECO Energy will retain certain personnel liabilities, such as pension and severance agreements, and transfer others.
“The closing of this sale results in a complete exit from the coal-mining business,” TECO Energy CEO John Ramil said. “TECO Coal was an important component of TECO Energy’s business mix since the mid-1970s, contributing strong earnings and cash flow for many years. We appreciate the dedicated team members at TECO Coal and the contributions they have made to TECO Energy’s success.”
Elaborating on the company’s shift toward other sectors, Ramil said the transaction returns TECO to a mixture of regulated electric and gas-utility businesses.
“I would like to thank all those who have contributed over the years to positioning our company to completely focus on growing our strong utility operations,” Ramil said.
TECO Coal was classified as an asset held for sale in the third quarter of 2014. Since then, its operating results have been reported as discontinued operations. Through June 30, 2015, TECO recorded noncash valuation adjustments of approximately $128 million, after tax, to the carrying value of TECO Coal and expects that any final adjustments will not be significant.
J.P. Morgan Securities LLC acted as TECO Energy’s financial adviser; Skadden, Arps, Slate, Meagher & Flom, LLP acted as its legal adviser.
TECO Energy is an energy-related holding company with regulated electric and gas utilities in Florida and New Mexico. Tampa Electric serves more than 700,000 customers in West Central Florida, Peoples Gas System serves more than 350,000 customers across Florida and New Mexico Gas Co. serves more than 510,000 customers across New Mexico.
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