International law firm McDermott Will & Emery LLP represented Gunvor Group, Ltd., one of the world’s leading commodity traders, in its subsidiary’s purchase of one-third interest in Signal Peak coal mine in Montana from the subsidiary joint venture owners FirstEnergy Corp. (NYSE: FE) and Boich Companies. The acquisition was successfully closed for a total purchase price of USD $400 million.
FirstEnergy and Boich Companies, a privately held Columbus, Ohio-based coal company, originally purchased Signal Peak in 2008 as a joint venture, with FirstEnergy acquiring a 45 percent interest for USD $125 million. In 2009 FirstEnergy invested an additional USD $8.5 million, increasing its interest to 50 percent.
The current value of the Signal Peak operation is in excess of USD $1.5 billion, which includes existing debt. As part of the definitive purchase agreement, FirstEnergy and Boich Companies will transfer their interests in Signal Peak mine to Global Mining Holding Company, LLC (Global Holding), and a new holding company that will include various Signal Peak entities. FirstEnergy Ventures, a FirstEnergy subsidiary, WMB Marketing, a Boich subsidiary, and Gunvor Group each will own a one-third interest in Global Holding.
In addition, Gunvor also has a substantial coal purchase agreement with Signal Peak. Signal Peak produces a low-sulfur, low-ash bituminous coal compared to typical eastern coal. Overall, the production forecast for Signal Peak, including future surface operations, is expected to rise to approximately 15 million clean tons per year from the current nine million tons, which can be sold to Gunvor as well as other domestic and international customers.
“We were delighted to have been part of the team that successfully advised on the closing of this acquisition,” said McDermott Corporate partner Mark Crofskey, based in London. “This was a significant deal for our client Gunvor and highlights our ability to field a cross-border team in corporate, energy, tax and other practice areas.”
At McDermott, the deal was overseen by a cross-border team led by London partners Mark Crofskey and David Birchall and New York partners Thomas Sauermilch and Meir Lewittes, with assistance from numerous lawyers across multiple practices and offices around the world, including, Rashpaul Bahia, Susan Cooke, Bethany Hatef, Scott Arrington, James Lastowka, David Levine, Andrew Watson, Elizabeth Philpott, Gary Karch, Sandra McGill, Maureen O’Brien, James Ross, Robert Clary II, Charlotte Doerr, Lawrence Grabau, Michael Pilo and Daniel Zucker.
McDermott’s role in representing Gunvor on this successful acquisition further highlights our proven track-record in advising clients on high-end cross-border deals in the energy and commodities sectors. In a recent highlight, we have advised The Vitol Group, one of the world’s largest independent energy trading companies, on its USD $515m sale to the Korean National Oil Corporation and continue to act for leading players in the energy sector such as Shell International and EDF Energy.
