Westmoreland Coal Co. (WLB) announced the completion of twin acquisitions of Oxford Resources GP LLC and Buckingham Coal Company, LLC.
In one transaction, it completed the acquisition of Oxford Resources GP LLC, the general partner (“GP”) of Oxford Resource Partners, LP (OXF), an Ohio-based master limited partnership (“MLP”), engaged in the production of steam coal. Westmoreland paid a sum of $30 million in cash for the acquisition of GP. It also provided royalty-bearing coal reserves to the MLP and received 4,512,500 common units of the MLP in exchange.
The MLP will now be known as Westmoreland Resource Partners, LP, while the GP will be called Westmoreland Resources GP, LLC. The MLP will operate as a stand-alone publicly traded MLP, with the ownership interest of Westmoreland being 77% of the fully diluted limited partner interests. Moreover, common units of Westmoreland are trading as Westmoreland Resource Partners (WMLP) on the NYSE.
The acquisition of the GP will provide Westmoreland with a platform to put into action its strategies to provide the U.S. and Canadian coal assets to the MLP in exchange for cash and other limited partner interests. The acquisition will not only provide an opportunity to Westmoreland to unlock its potential but also complement its stable cash generating business model.
The acquisition will thus prove beneficial for both the MLP and Westmoreland, ensuring that the company continues to witness long-term growth. The company has already witnessed a 4.22% rise in its share prices, closing the trading session on Jan 2, 2015, at $34.61.
In another transaction worth $34 million, Westmoreland acquired Buckingham Coal Company, LLC, an Ohio-based company also engaged in the coal business.
Westmoreland has a Zacks Rank #3 (Hold). A better-ranked stock in the same sector includes Hallador Energy Company (HNRG), sporting a Zacks Rank #1 (Strong Buy).
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