Rhino Resource Partners Enters Options Agreements with Royal Energy Resources and Yorktown Partners
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Rhino Resource Partners LP has entered into an option agreement with Royal Energy Resources, Inc., Rhino Resource Partners Holdings, LLC, an entity wholly-owned by certain investment partnerships managed by Yorktown Partners LLC, and Rhino GP LLC, the general partner of Rhino, whereby Rhino has received an option from Rhino Holdings to acquire substantially all of the outstanding common stock of Armstrong Energy, Inc. that is currently owned by investment partnerships managed by Yorktown.
The option agreement stipulates that Rhino can exercise the call option no earlier than January 1, 2018 and no later than December 31, 2019. In exchange for Rhino Holdings granting Rhino the call option to purchase Armstrong, the partnership issued 5.0 million new common units to Rhino Holdings upon the execution of the option agreement.
The option agreement stipulates Rhino can exercise the call option and purchase the common stock of Armstrong Energy, a coal producing company with mines located in the Illinois Basin in western Kentucky, in exchange for a number of newly issued Rhino common units to be issued to Rhino Holdings, which when added with the call option premium units discussed above, will result in Rhino Holdings owning 51 percent of the fully diluted common units of Rhino. The purchase of the Armstrong Energy common stock through the exercise of the call option would also require Royal to issue 51 percent ownership interest of Rhino GP, currently owned and controlled by Royal, to Rhino Holdings. The exercise of the call option in the option agreement is dependent upon a successful negotiation with the current bondholders of Armstrong Energy to restructure their bonds as well as the refinancing of the partnership’s current revolving credit facility.
The option agreement also contains an option granted from Rhino to Rhino Holdings whereby Rhino Holdings has the right, but not the obligation, to cause the partnership to purchase substantially all of the outstanding common stock of Armstrong Energy from Rhino Holdings under the same terms and conditions discussed above for the call option. The exercise of the put option is dependent upon a successful negotiation with the current bondholders of Armstrong Energy to restructure their bonds as well as the termination and repayment of any outstanding balances under the partnership’s current revolving credit facility.
Rhino and Armstrong Energy will continue to operate and be governed as independent entities until the call option or put option is exercised if either such options were to occur.
About Rhino Resource Partners
Rhino Resource Partners LP is a diversified energy limited partnership that is focused on coal and energy related assets and activities, including energy infrastructure investments. Rhino produces metallurgical and steam coal in a variety of basins throughout the United States.
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