Sherritt International Corp. Tuesday said it will sell its coal business
in two separate transactions for a total of about 946 million Canadian
dollars ($892 million) in order to focus on its core nickel and oil
operations.
The Toronto-based resource company, the largest thermal
coal producer in Canada, said it will sell a portfolio of coal assets
that include seven producing mines in Western Canada to U.S.-based
Westmoreland Coal Co. for about C$465 million. The sale also includes a
stake in an activated carbon plant and a char facility which supplies
barbecue briquette producers.
Separately, Westmoreland called the deal "a
transformational opportunity" that will add annual coal output of about
27 million tons, more than doubling its business. It said the purchase
will make it the sixth largest North American coal producer, as measured
by 2012 production.
Sherritt said consideration for the Westmoreland deal
includes C$312 million in cash and the assumption of capital leases
worth about C$153 million.
It is also selling its Canadian coal and potash royalty
business to a group led by Altius Minerals Corp. for about C$481 million
in cash.
Altius, a minerals royalty company based in St. John's
Newfoundland, will own a 51% stake in the royalties, with a subsidiary
of Boston-based Liberty Mutual Insurance and other private parties as
partners.
Sherritt also announced another development Tuesday--that
its board has received a request from certain unidentified shareholders
to call a special shareholder meeting to consider the replacement of
certain Sherritt directors. Sherritt said its board will review the
request and provide an update "in due course." Further details on the
shareholders' move weren't immediately available.
On exiting the coal business, Sherritt said the sale will
allow it to cut debt and expand its core business, which includes the
Ambatovy nickel project in Madagascar, as well as a nickel joint venture
and a producing oil business in Cuba.
The company, whose financial results have been pressured by
lower commodity prices in recent quarters, said it estimates a loss on
the sale of about C$460 million on the sale, C$308 million of which
would be goodwill related to the purchase of coal assets in 2008.