Canadian firm Sherritt International has completed the sale of its coal business in an all-cash deal worth $946m.
The company's Prairie and Mountain operations were acquired by Westmoreland Coal for $465m, while its royalty portfolio and shares in coal development assets were purchased by a group led by Altius Minerals for $481m.
Post-closing adjustments, changes to capital leases, working capital and coal inventories, are expected to be concluded in the second quarter of the year.
Sherritt plans to use the proceeds to lower the company's debt and strengthen its balance sheet, and has already commenced discussions with advisors and debt holders.
Some of the proceeds of the deal will be allocated for general corporate purposes, including the funding of the Ambatovy ramp-up.
Sherritt CEO David Pathe said this transaction benefits Sherritt by rationalising the company's asset base, significantly enhancing liquidity and providing the opportunity to strengthen its balance sheet.
"We are continuing to execute on our strategy to build positive momentum and create sustainable shareholder value," Pathe said.
The company had a revolving credit facility of $525m, which it used primarily for letters of credit and short-term funding for the coal business.
About $300m was repaid from Sherritt's existing cash balances prior to the closing of the transaction, the company said.
In addition to working with Westmoreland over the Obed Mountain Mine remediation plan, Sherritt said it will meet all financial obligations resulting from the last year's Obed Mountain Mine containment pond breach.
Image: Sherritt plans to use the proceeds from the sale of coal unit to lower its debt and strengthen its balance sheet. Photo: courtesy of dan / FreeDigitalPhotos.net.