Russian Steelmaker Severstal Sells U.S. Subsidy PBS Coals to Corsa Coal

Researched by Industrial Info Resources (Sugar Land, Texas)--Russian steel and mining company OAO Severstal (MCX:CHMF) (Moscow) has announced that it will sell U.S. metallurgical coal subsidiary PBS Coals to Corsa Coal Corporation (TSXV:CSO) (Toronto, Ontario) for $60 million in cash.

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The transaction, which has an enterprise value of $140 million, is expected to be complete by the middle of August, subject to customary closing conditions. Severstal will receive $60 million in cash, plus the balance, if any, of $20 million in cash that currently is used as bonding collateral by PBS Coals to fund reclamation liabilities. The $20 million will be used to fund escrow accounts for certain liabilities assumed by Severstal.

PBS Coals (Somerset County, Pennsylvania) commenced production in 1963 and was acquired by OAO Severstal in 2008. Its current operations include 13 developed mines (three active), and two preparation plants, with access to both the CSX and Norfolk Southern Railway.

In first quarter of 2014, PBS sold about 233,000 tons of metallurgical and thermal coal, and generated $23 million in operating revenue. PBS Coals produces 3.3 million tons of raw coal, of which 55% is coking coal and 45% is steam coal, according to company's website.

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