Coal news and updates

TECO Energy (TE) Finds New Buyer for Coal Business

TECO Energy, Inc.
TE
, through its subsidiary, has entered into a non-binding letter of intent with a new buyer for selling all of its interest in TECO Coal LLC. Previously, the company had been talking with Kentucky-based Cambrian Coal Corp. to sell the business. However, the sales agreement did not close on Jun 5, 2015 as the buyer failed to satisfy the terms of sale, which has rendered the agreement terminable by either party.

Under the sales agreement with Cambrian Coal Corp., total sales price was decided at $140 million, including a future contingent consideration of $60 million, if certain coal benchmark prices reach specific levels over the next five years.

The transaction with the new buyer would be subject to the negotiation of a definitive agreement and third-party consents. Both parties expect to close the sale on or before Jul 3, 2015. The new buyer would not require external funding for the acquisition.

TECO Energy intends to exit the coal business due to challenging conditions in the coal market. The company has already classified the business under discontinued operations and has written it down to reflect the transaction value.

Many developed nations, including the U.S., stand strictly against coal use and are setting public health pollution limits. The Environmental Protection Agency has taken measures to curb carbon pollution and limit air toxins like mercury and pollutants that cause smog.

Further, the availability of cleaner sources of fuel, such as natural gas and renewable energy like wind and solar, have played a major role in curbing the use of coal. Along with the plunging cost of oil, these factors have played a great deal in cutting coal's market share.

source: http://www.nasdaq.com