The company is selling its wholly owned, Utah-based Canyon Fuel Company subsidiary to privately held Bowie Resources for $435 million in cash. The directors of both companies have approved the transaction and the deal is expected to close in the third quarter. Arch expects to record a pretax gain on the sale of $120 million.
The sale is expected to cut more than $200 million from Arch Coal’s capital spending requirements for the period 2014 to 2017. And as we pointed out a couple of days ago, cutting spending and costs is what it is all about in mining these days, whether the company is digging up coal, gold or diamonds.
Bowie plans to retain all 725 employees currently employed by Canyon Fuel.
Shares of Arch Coal were up about 4.5% in the opening minutes of trading this morning, at $3.76 in a 52-week range of $3.47 to $8.86.
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