Sherritt International (T.S) selling Canadian coal business for $946 million, stock up 15%

Canadian Press, The Canadian Press
0 Comments| December 24, 2013


Sherritt International Corp. (TSX:T.S, Stock Forum) says it's selling its entire coal business in Canada to two separate buyers for $946 million. Colorado-based Westmoreland Coal Co. will buy Sherritt's mines in Alberta and Saskatchewan for $465 million.

While Altius Minerals of St. John's, N.L., (TSX: T.ALS, Stock Forum) will buy the company's portfolio of coal royalties and development projects for $481 million. Altius shares jumped 12.5% to $11.93.

Sherritt International shares rose 14.8% to $3.88, leaving the company with a market cap of $1.1 billion, based on 297.3 million shares outstanding. The 52-week range is $6.17 and $3.02.

“Today’s transaction to divest the coal business is the culmination of a competitive business process which has extended over several months,’’ said Sherritt President and CEO David Pathe in a press release. It simplifies our asset portfolio to concentrate on our core strengths, enhances our liquidity and provides us with an opportunity to reduce our debt.”

Westmoreland, based in Englewood, Colo., near Denver, will pay a total of $465 million, including $312 million cash and the assumption of capital leases valued at $153 million.

It also expects to integrate the workforces of Sherritt's Prairie and Mountain coal opertions with its own operations. The companies didn't announce how many Sherritt employees are involved.

Sherritt and Westmoreland scheduled separate mid-morning conference calls with analysts.

A group led by Altius Minerals will buy Sherritt's entire coal royalty portfolio as well as Saskatchewan development projects for a total of $481 million cash.

Altius and other partners including a subsidiary of Liberty Mutual Insurance will acquire a 51 per cent interest in a portfolio of 11 producing coal and potash royalties in Alberta and Saskatchewan.

``We will now generate royalty revenue from a well-diversified portfolio of 12 major Canadian mining operations that can grow significantly through Altius' existing pipeline of pre-production stage royalties,'' said Altius chief executive Brian Dalton.

``The addition of an extensive undeveloped mineral lands position also fits perfectly with Altius' proven project generation and royalty creation abilities.''

The Newfoundland-based company will also acquire Sherritt's 50 per cent interest in a partnership that has billions of tonnes of undeveloped coal and potash resources in Saskatchewan.

Sherritt also issued a vague statement Tuesday saying it has received a demand for a special shareholders meeting to remove certain independent directors from the company's board.

The company didn't identify which shareholder had submitted the requisition and said it would ``provide an update in due course.''

Sherritt currently has eight independent directors on a nine-member board, which includes Pathe. Its chair is Harold (Hap) Stephen, a well-known expert in corporate restructurings.


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