KNOXVILLE, TN, April 29 /CNW/ - Further to its news release dated March 12, 2010, Xinergy Ltd. (TSX: XRG) ("Xinergy" or "the Company") through its wholly owned subsidiary, Shenendoah Energy, LLC, is pleased to announce that, effective yesterday, it completed the acquisition of the remaining 95% interest of Raven Crest Mining, LLC ("Raven Crest") that Xinergy does not already own for US$40.0 million in cash, the assumption of US$18.8 million in debt, which was paid upon closing, and a working capital adjustment of approximately US$5.0 million ("the Transaction"). Xinergy had indirectly acquired 5% of Raven Crest in December 2009. The purchase price for the Transaction was financed by the issuance of US$75.0 million of secured notes issued to Marret Asset Management Inc. on behalf of various funds under management (the "Secured Notes"). The Secured Notes are due on April 29, 2015 and pay interest at a rate of 9.75% per annum.
Raven Crest operates surface mines in Boone County, West Virginia and controls approximately 17.0 million tons of coal reserves. The Transaction increases Xinergy's total reserves by approximately 110%, from approximately 15.7 million tons to approximately 33.0 million tons. Raven Crest produced approximately 800,000 tons of high quality thermal coal in 2009 and generated earnings before taxes interest deprecation and amortization ("EBITDA") of approximately US$24.0 million.
Raven Crest has approximately 660,000 tons of coal contracted in both 2010 and 2011 at prices of US$93.50 and US$95.00 per ton, respectively.
Mr. Jon Nix, CEO of Xinergy, commented, "We are very pleased to complete this value accretive acquisition that will have an immediate and positive impact on Xinergy's production profile at such a favourable time in the coal market. As market conditions continue to improve, we look forward to taking advantage of Raven Crest's short-term and long-term potential to even further expand the Company's production."
In combination with its existing sales, the Company has approximately 1.0 million remaining tons contracted in 2010 at a blended average sales price of $92 per ton and over 1.2 million tons contracted in 2011 at a blended average sales price of $104 per ton. Xinergy is currently focused on increasing shareholder value through strategic opportunities to grow the Company by acquiring quality operations that have proven and permitted coal reserves and sales in place. Xinergy continues to develop existing properties that will expand its permitted reserve base that will allow the Company to increase capacity.
In connection with the Transaction, GMP Securities L.P. provided investment banking services and Canaccord Financial Ltd. provided M&A and financial advisory services. Canaccord Financial Ltd. provided the Board of Directors of Xinergy a fairness opinion with respect to the Transaction.
About Xinergy Ltd.
Headquartered in Knoxville, Tennessee, Xinergy Ltd., through its wholly owned subsidiary, Xinergy Corp. is engaged in coal mining in Eastern Kentucky. The Company controls mining properties in Kentucky and Alabama. Currently, Xinergy sells steam coal to electric utilities and industrial companies throughout the southeastern United States. For more information, please visit www.xinergycorp.com.
Information about Forward-looking information
This release contains "forward-looking information" that includes information relating to future events and future financial and operating performance. Forward-looking information should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking information is based on information available at the time it is made and/or management's good faith belief as of that time with respect to future events, and such information is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking information. Important factors that could cause these differences include but are not limited to(a number of the first items are no longer relevant now that this has closed(:; the business of the Company may suffer as a result of uncertainty surrounding the acquired assets; the Company may be adversely affected by other economic, business, and/or competitive factors; the worldwide demand for coal; the price of coal; the price of alternative fuel sources; the supply of coal and other competitive factors; the costs to mine and transport coal; the ability to obtain new mining permits; the costs of reclamation of previously mined properties; the risks of expanding coal production; the ability to bring new mines on line on schedule; industry competition; the Company's ability to continue to execute its growth strategies; and general economic conditions. These and other risks are more fully described in the Company's filings with the Canadian Securities Administrators. You should not put undue reliance on any forward-looking information. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking information, no inference should be drawn that we will make additional updates with respect to those or other forward-looking information.
Neither TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE XINERGY CORP.
For further information: For further information: Miranda Smith, (647) 428-7422