Consol Energy Inc. on Tuesday laid out plans for the splitting of the company, which will separate the natural gas operations that have become the company's driving force in the past decade and spin out its coal division, whose roots go back more than 150 years.
Consol (NYSE: CNX), which has long talked about separation, announced in December 2016 that it would do so. But the filing with the U.S. Securities and Exchange Commission provides more details than before, including word that it could happen by the end of the year and shifting executives between the two companies.
The as-yet-unnamed company would hold the natural gas business, while the spinoff company, which would likely take over the Consol Energy name, would have ownership of Consol's three underground mines in Greene and Washington counties known as the Bailey, Harvey and Enlow Fork mines, Consol's ownership interest in CNX Coal Resources LP (NYSE: CNXC), as well as other coal-related assets, including its coal export terminal in Baltimore, Md., and reserves. CNX Coal Resources already owns 25 percent of the underground mining complex after going public in 2014.
All three companies — Consol Mining Corp., CNX Coal Resources and the natural gas company — would be publicly traded. Current Consol shareholders will receive an as-yet-undisclosed portion of shares of the coal business. The transaction is being structured to be tax-free to shareholders, according to the filing.
Consol said that Nick DeIuliis, the current president and CEO of Consol Energy, would have the same title at the natural gas company. Before returning to Consol, DeIuliis had run the previous Consol-owned gas company, CNX Gas.
David Khani, who is Consol's CFO, will move over to the coal business as of Aug. 2 and will be replaced by Don Rush, who will be CFO and executive vice president. Rush is vice president of energy marketing.
Jimmy Brock, who has been running Consol's coal business as CEO of the coal division as well as CEO of CNC Coal Resources, will be CEO of the standalone coal company. Katharine Fredriksen, senior vice president of environmental affairs, will be the president of the coal business.
"Today's filing represents a significant step towards completing the company's separation, with both entities being well capitalized and free cash flow generating," said DeIuliis in a statement. "This strategic separation will enable both businesses to focus on their inherent strengths and unlock value for their shareholders."
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