FBR Capital Remains Bullish on Suncoke Energy (SXC) Following Announced Divestiture Deal

FBR Capital reiterated an Outperform rating and $9.00 price target on SunCoke Energy (NYSE: SXC) following an announced divestiture deal with Revelation Energy. The divestiture includes SunCoke Energy’s coal mining assets, mineral leases, real estate, and mining reclamation costs. Altogether, management expects the transaction to be cash flow neutral for SunCoke Energy by the end of 2017. SunCoke estimates that “avoided potential mine closure and reclamation costs” will total about $12M.

Analyst Lucas Pipes commented, "Yesterday, April 6, SXC announced the close of a deal with Revelation Energy to divest substantially all of the company’s coal mining business, for a cost of roughly $10.3M payable to Revelation to take ownership of the assets and associated costs. The company retains legacy black lung and workers’ compensation liabilities, as well as certain properties. The sale is expected to be cash flow neutral to SXC by the end of 2017, driven by the reduction of associated SG&A and mining-related overhead costs, as well as an eventual decline in legacy liability-related expenses. We expect the company’s benefits from this transaction to be a long-term positive, simplifying SXC's asset mix and allowing management's attention to return to the company's core operations. We maintain our Outperform rating and $9.00 price target on SXC."

For an analyst ratings summary and ratings history on SunCoke Energy click here. For more ratings news on SunCoke Energy click here.

Shares of SunCoke Energy closed at $5.97 yesterday.

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