Dive Brief:

• TECO Energy has signed an agreement to sell its coal mining subsidiary to Cambrian Coal, a member of the Booth Energy Group, for $170 million, according to reporting from Platts.
• The purchase price includes future contingent consideration of $50 million if certain coal benchmark prices reach certain levels over the next five years. The $120 million cash base purchase price is subject to post-closing adjustments.
• The companies said they expect the deal to close by year's end, subject to the purchasers obtaining financing, and other normal closing conditions.

Dive Insight:

The deal “will result in a complete exit from the coal mining business," according to TECO Energy CEO John Ramil.

TECO Coal has been an "important component" of TECO Energy’s business mix since the mid-1970s, Ramil said, with strong earnings and cash flow for many years. “When this transaction closes, it will complete a long journey returning TECO Energy to its core utility businesses," Ramil said. 

Platts reported that the deal will double annual production for Booth, as well as shifting the company's product mix towards metallurgical coal. The deal "will enable Booth Energy to increase its presence in the Central Appalachian market," said Cambrian Coal President James Booth.

J.P. Morgan Securities LLC acted as TECO Energy’s financial advisor, and Skadden, Arps, Slate, Meagher & Flom, LLP acted as its legal advisors. Deutsche Bank Securities, Inc. acted as exclusive financial advisor, and Frost Brown Todd acted as legal advisors to Cambrian Coal.