SunCoke ends Q4 with $350 million liquidity, touts parent and partnership re-fi transactions

By Paul Deckelman

New York, Jan. 31 – SunCoke Energy, Inc. ended the 2017 fourth quarter and full year with consolidated liquidity of nearly $350 million, and a consolidated leverage ratio of net debt as a multiple of trailing 12-month adjusted EBITDA of 3.78 times – down modestly from 3.95 times a year earlier.

And senior executives of the Lisle, Ill.-based producer of industrial coke for steelmaking and other uses said Wednesday that a series of refinancing transactions in 2017 undertaken at both the parent company level and at the company’s limited partnership entity, SunCoke Energy Partners, LP, greatly extended its maturities and gave it more financial flexibility.

SunCoke’s recently installed president and chief executive officer, Michael Rippey – a former top Arcelor Mittal executive who took over leadership of the company from longtime CEO Frederick A. “Fritz” Henderson on Dec. 1 – told analysts on a conference call following the release of results for the quarter and full-year ended Dec. 31 that SunCoke “successfully refinanced our capital structure in 2017, including restructuring our revolving credit facilities at both SXC [i.e., SunCoke Energy] and SXCP [SunCoke Energy Partners].”

“This refinancing provided a significant extension of our debt maturities of more than four years, increasing the weighted average maturity of our debt to nearly seven years on a consolidated basis.

“Importantly, the restructuring provides us the flexibility to execute our growth and capital allocation priorities going forward.”

Company senior vice president and chief financial officer Fay West said that the company “optimized our consolidated balance sheet by refinancing SXCP’s notes, repaying SXC’s remaining notes outstanding and restructuring both revolvers. These actions meaningfully extended our debt maturities and provide us with significant flexibility moving forward, to execute our growth and capital allocation priorities.”

Considerable capital market activity

SunCoke Energy and SunCoke Energy Partners were busy players in the capital markets in 2017.

The partnership sold $630 million of new 7˝% senior notes due 2025 in May, pricing that scheduled forward calendar issue on May 19 at 98.513 to yield 7ľ%, after downsizing the deal from an originally announced $750 million.

It used a large portion of the proceeds from that deal to take out its $462.94 million of existing 7 3/8% notes due 2020, with holders tendering some $420.411 million, or almost 91%, in a tender offer that expired on May 23, and subsequently to redeem the remainder.

Also in May, parent SunCoke Energy entered into a new $100 million five-year senior secured revolver, while SunCokeEnergy Partners amended its existing revolver that it had entered into in 2013, increasing it to $285 million and extending its maturity to 2022 – matching that of the parent company – from 2018.

In July, the partnership said that it had repaid $50 million outstanding on a term loan and repaid $172 million of debt under its former revolver, using proceeds from the new 2025 notes and loan drawdowns.

It also announced plans to repay a $112.6 million promissory note due 2021 in August using revolver drawdowns.

As the year was coming to a close, parent SunCoke Energy said that it would redeem all $44.6 million of its outstanding 7 5/8% senior notes due 2019, using the proceeds from a $45 million incremental term loan it entered into.

And SunCoke Energy Partners brought a $70 million add-on to the $630 million of 7˝% notes due 2025 that it had sold in May, pricing that tap at 104.5 to yield 6.565%. It planned to use the proceeds to pay down revolver debt.

Debt up but liquidity strong

As of the end of 2017, the company’s balance sheet showed a consolidated debt figure of $887 million, most of it at the partnership level, versus $858 million a year earlier.

CFO West said the company ended the year with “strong” liquidity of nearly $350 million, consisting of $129.2 million of cash on the balance sheet – although that was down somewhat from $134 million at the start of the year – and $227 million of available revolver borrowing capacity.

© 2015 Prospect News.
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