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Coal export investor pushes for control of Ambre Energy

A major investor is positioning itself to take control of the Australian company trying to build coal export terminals in Oregon and Washington.

A Denver-based private equity firm, Resource Capital Funds, could eventually own as much as 55 percent of Ambre Energy, according to the terms of a deal Ambre shareholders will be asked to approve when they meet this week.

Ambre already owes Resource Capital $110 million. The proposal would allow the equity firm to convert some of that debt into a greater ownership interest.

It's unclear what effect, if any, the change would have on coal export terminals that have stirred region-wide interest. Ambre says it remains well positioned to build the projects in Boardman and Longview, Wash.

"The shift does not impact the two export projects," Ambre spokeswoman Liz Fuller said. "If anything, it signifies a deepening investment in the projects. We are confident both are viable."

Ambre is leading efforts to build two coal export facilities in the Pacific Northwest. One facility at the Port of Morrow in Boardman would send as much as 8.8 million tons of coal annually from Wyoming and Montana to Asia. Coal would arrive at Boardman by train, be transferred to enclosed barges that would ply the Columbia River, then be loaded on Asia-bound ships in Port Westward. Ambre says the facility will create 50 full-time jobs and 2,100 temporary construction jobs.

The company is banking on a robust export market for coal in Asia. It's working on a larger, longer-term, $650 million project in Longview, Wash. that could export an additional 48 million tons, as well as a separate export facility in Texas. Environmental groups have strongly protested the facilities here.

Resource Capital is a major financier of the Australia-based coal company. One of its partners already sits on Ambre's board. The proposals being weighed this week would give it even more sway over Ambre and eventually allow it to take majority control.

One vote before Ambre shareholders would allow the equity firm to immediately increase its share of Ambre from 19.9 percent to 26.5 percent. Another would allow Resource Capital to eventually take majority control in lieu of Ambre repaying an undetermined amount of the $110 million it owes the equity firm.

Resource Capital Funds is the only investor to have given Ambre outside financing this year, most recently awarding a $20 million letter of credit in August.

Ambre has struggled financially while developing the proposed terminals, which the company says is typical of such efforts. After losing $30 million in a six-month period ending last December, Ambre's independent auditor warned investors that unless the company raised more money, "material uncertainty" existed about whether it could continue operating.

Ambre delayed a plan last year to be listed publicly on the Australian Securities Exchange. In August, the company announced its purchase of a Montana coal mine was indefinitely suspended, a setback for its coal export plans. It had planned to extract coal from that mine, called the Decker Mine, and ship it to Asia through its proposed facilities. But the deal depended on Ambre assuming $70 million in liabilities required for the mine's reclamation, which became a sticking point.

Fuller, the Ambre spokeswoman, said the company is now considering operating the coal terminals and charging to export other companies' coal. "We're keeping the options open," she said.

Ambre missed a July 2013 deadline Resource Capital set for getting state and federal permits for the Port of Morrow terminal at Boardman. The new deadline is December 2015. The company says it's a realistic goal and they expect more investors to come forward after receiving regulatory approvals.

"We have multiples of investors that are very interested in this project," said Clark Moseley, the Ambre executive leading the Morrow project. "But they're sitting on the sidelines waiting for these permits. Once it gets permits you'll see a significant amount of capitalization and a very, very strengthened balance sheet."

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