Russian steelmaker Severstal has announced that its wholly-owned subsidiary 7027940 Canada Limited has entered into a definitive agreement with Corsa Coal Corp., a Canadian public company, for the sale of PBS Coals Inc., a metallurgical coal producer located in Pennsylvania, US.
The transaction with a value of $140 million is expected to be completed by mid-August this year, subject to customary closing conditions. The proceeds from the deal are to be used for Severstal's general corporate purposes.
As transaction consideration, Severstal will receive $60 million in cash, plus the balance, if any, of $20 million in cash currently used as bonding collateral by PBS Coals Inc to fund reclamation liabilities. The $20 million will be used to fund escrow accounts for certain liabilities assumed by Severstal under the deal terms.
As part of the transaction, Corsa Coal Corp. has also agreed to assume reclamation and water treatment liabilities totaling approximately $60 million.