NEW YORK (Reuters)-
OXF of Oxford resources Partner LP.
N The biggest selling point is the generous dividend of coal miners, but the dividend may not be as rich as promised, and the funds raised in the initial public offering rarely increase its business.
Oxford, which drives coal for power generation from open-air mines in the northern Appalachian and Illinois basins, hopes to raise about $166.
Initial public offering next week is 25 million.
COLUMBUS, Ohio
Beijing-based companies have locked in sales contracts for the next two and a half years and are looking to pay a 9% dividend if coal prices are flat.
This is very high for any company, especially coal miners.
"Dividend payments will certainly attract investors, but at this point I don't think there is a suitable footprint for the deal to attract investors," said IPOfinancial . ".
Chairman David Menlo
In the three months ended March 31, Oxford's net income fell sharply compared with the same period last year, and the company's cash expenditure exceeded its operating income.
Earlier this month, Oxford warned in a regulatory document that it may not be able to pay the planned quarterly dividend.
The company said it would need to generate about $36.
7 million of the remaining cash payments are made each year, far from $16.
1 million per cent for the year ended December 31.
"The risk for such companies is uncertainty about pricing and quantity, which makes it difficult to support consistent high yields," said Nick Einhorn, an analyst at Connecticut.
Headquartered in the capital of the Renaissance.
Coal accounts for about 50% of the United States. S. electricity.
While it is expected that the industry will continue to be the largest electricity fuel in the United States in the coming decades, the industry is facing restrictions on sulfur dioxide and nitrogen oxide emissions, at least with the possibility of being more restricted by Congress
Meanwhile, sales of thermal coal used in power production are struggling with costs, says Jeff Wilson, a mining expert at VA-Richmond.
Wilson energy consultants
According to the industry newsletter Coal and Energy Price Report, the price of thermal coal is about $64 per ton.
"Prices have fallen and margins have been squeezed a lot," he said . ".
"There may be more consolidation than a new group of companies entering the industry.
"Oxford cut the IPO's expected price range by $1 in an amended document in July 2, which may be a sign of investor hesitation.
Another potential concern for investors is $154.
The IPO expected net income of $6 million, only $22.
1 million of the business will grow.
The rest is used for repayment of debts and expenses, payment of partners, payment of consultation agreements and working capital.
For the same purpose, Oxford plans to borrow another $86 million.
"I don't think it's a deal-breaker, but it's enough to put investors on hold," Einhorn said of the additional loan . ".
Niu Jin and the company's lawyers did not immediately respond to a phone call for comment.
The underwriters were led by Barclays Capital and Citigroup.
These stocks are expected to be traded in the name of New York securities so "OXF.
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