March 8, 2018 - Corsa Coal Corp. (TSXV: CSO) has announced that it is selling its thermal and industrial coal division, Central Appalachia ("CAPP"), to a buyer group led by CAPP's current management team (the "Transaction").
"The sale of our CAPP division will allow us to dedicate all of our corporate resources to the metallurgical coal market where we believe we can achieve the highest rates of return on investment," said George Dethlefsen, the Company's Chief Executive Officer. "Corsa's focus going forward is to aggressively increase its metallurgical coal production, maximize value added services activity, and continue to grow our metallurgical sales and trading platform."
CAPP division's current operations include one underground mine, the Cooper Ridge Deep Mine, and two surface operations, the Valley Creek and Buffalo Creek mines. The consideration to be received by the Company in connection with the Transaction consists of the assumption by the buyer group of certain debt, leases and future costs, including end of mine closure costs, estimated in the aggregate by the Company at approximately US$8.0 million. For the year ended December 31, 2017, the CAPP division (i) generated revenues of US$46.4 million and had US$20.2 million of negative EBITDA, inclusive of a US$20.0 million asset impairment; and (ii) sold 539,000 tons of thermal coal and 135,000 tons of high vol metallurgical coal.
As a result of the Transaction, the Company is postponing the release of its fourth quarter and full year 2017 financial results, and the related conference call previously scheduled for 10:00 a.m. (Eastern Time) on March 8, 2018, until the week of March 12, 2018. A new time and date for this conference call will be announced shortly.
Further Transaction Details
The Transaction will be effected by way of a sale of the membership units of Company's subsidiary, Kopper Glo Mining, LLC to Industrial Minerals Group, LLC (the "Buyer") expected to be completed on or about March 9, 2018. Principals of the Buyer include Hunter Hobson, the president of the Company's CAPP division, Keith Dyke, former president of the Company's CAPP division and the Buyer received financing from entities controlled by a member of the Robertson family. The Robertson family controls the general partner of Quintana Energy Partners, L.P. and its affiliated investment funds (collectively, "Quintana"). Quintana currently controls approximately 41% of the Corporation's issued and outstanding common shares.
The board of directors of the Company has unanimously (with conflicted directors abstaining) determined that the Transaction is in the best interests of the Company and approved the Transaction.
The Transaction constitutes a "related party transaction" as defined under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). However, the Transaction is exempt from the minority approval requirements of MI 61-101, as neither the fair market value of the subject matter of, or the consideration for, the Transaction, exceeds 25% Corsa's market capitalization calculated in accordance with MI 61-101. In addition, the Transaction constitutes a "Reviewable Disposition" under Policy 5.3 of the TSX Venture Exchange Corporate Finance Manual. Shareholders holding approximately 34% of the Company's issued and outstanding common shares, and approximately 56% of the Company's issued and outstanding common shares excluding common shares of the Company controlled by Quintana, evidenced their approval of the Transaction by written consent provided to the TSX Venture Exchange (the "Exchange"), and the Transaction was subsequently approved by the Exchange.
Although the Company is confident that the Transaction will be completed expeditiously, at this time there can be no assurance that the Transaction will be completed or completed in a timely manner.
Corsa is a coal mining company focused on the production and sales of metallurgical coal, an essential ingredient in the production of steel. Our core business is producing and selling metallurgical coal to domestic and international steel and coke producers in the Atlantic and Pacific basin markets.
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