IPO Daily: SunCoke, Promise in Metallurgical Coal (SUN, SXC, MT, X, AKS)

Commodities & Metals

Published: March 24, 2011 1:01 pm

Last Updated: April 27, 2020 11:45 pm

We have seen a filing from SunCoke Energy, Inc. to come public via an initial public offering. What makes this deal stand out more than other IPO filing is that Sunoco, Inc. (NYSE: SUN) is the selling shareholder. SunCoke plans to list its common stock on the New York Stock Exchange under the symbol “SXC.”

The company claims to be the largest independent producer of high-quality metallurgical coke in the Americas with more than 45 years of coke production experience. Metallurgical coke is a principal raw material in the integrated steel-making process. Its three primary customers are ArcelorMittal (NYSE: MT), United States Steel Corporation (NYSE: X), and AK Steel Corporation (NYSE: AKS). Most contracts are under longer term take-or-pay agreements and the company noted that its coke sales agreements are an average of nine more years in duration.

Financial terms were not listed at all other than that the firm plans to sell up to $100 million in common stock. That figure can change at any time between now and its IPO date. Credit Suisse was listed as the lead manager in the offering.

It has owns and operates four metallurgical cokemaking facilities in the United States and it has designed and operates one cokemaking facility in Brazil under licensing and operating agreements of a customer. The company is also currently constructing a fifth facility in the United States that is expected to be completed in the second half of 2011. After its completion, the company sees its total cokemaking capacity to increase to approximately 4.2 million tons of coke per year in the United States. Its facility in Brazil has cokemaking capacity of approximately 1.7 million tons of coke per year, and the company has a preferred stock investment in the project company that owns the Brazil facility. SunCoke owns and operates coal mining operations in Virginia and West Virginia that have sold an average of approximately 1.2 million tons of metallurgical coal per year over the past three years.

For the year ended December 31, 2010, SunCoke’s total revenues and Adjusted EBITDA were approximately $1.3 billion and $227.3 million, respectively.

JON C. OGG

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