ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, February 29, 1996 TAG: 9602290060
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Coastal Corp. said Wednesday it has put its Roanoke-based coal business up for sale.
Coastal, a Houston-based oil and natural gas company, has hired Lehman Brothers, a New York investment banker, as a financial adviser for the sale, according to Steve Eames, a company spokesman.
It will take four to six weeks to prepare a prospectus. Coastal is not currently talking with any potential buyers, Eames said.
William Hyler, a securities analyst for Oppenheimer & Co., a New York investment banker and broker, estimates that the sale could bring Coastal between $700 million and $900 million.
The sale would not necessarily mean closing Coastal's offices in Roanoke, where 43 people are employed, Hyler said. That would depend on whether the buyer needed the Roanoke office. For instance, if a foreign company without any other U.S. coal operations bought Coastal's coal business, the offices might remain in Roanoke, Hyler speculated.
Besides the headquarters for its coal sector, Coastal's ANR Coal Co. and Coastal Coal Sales Co. have offices in downtown Roanoke. The company also owns coal lands and has a coal cleaning plant near Coeburn in Wise County.
At the end of 1995, Coastal owned 823 million tons of recoverable low-sulfur coal reserves in Virginia, West Virginia, Kentucky and Utah. The company mined 17.1 million tons of coal last year and employs a total 1,146 people in its coal subsidiaries, Eames said.
The company's coal operations had sales of $459.6 million and an operating profit of $98.7 million last year. Coastal, overall, reported sales of $10.4 billion and operating profits of $751 million last year.
Coastal is a holding company with 270 subsidiaries, of which about 20 are involved in the coal business.
The sale of the coal operations is a major step in the company's plans for continuing growth, part of a restructuring begun in 1993, said Chief Executive David Arledge.
Arledge said Coastal expects to use the proceeds from the proposed sale to repay high-cost debt and other obligations and to provide flexibility to pursue other opportunities.
"For more than a decade," according to Coastal's annual report, "Coastal's coal subsidiaries have been among the company's most consistent, dependable sources of revenues and profits." The coal business has produced 11 consecutive years of earnings growth, the report said.
LENGTH: Medium: 51 linesby CNB