SunCoke slumps after delaying partnership IPO

SunCoke falls after saying it is delaying IPO of limited partnership because of weak market

Associated Press

NEW YORK (AP) -- Shares of SunCoke Energy Inc. sank Monday after the coal producer said it is postponing in the initial public offering of a master limited partnership of part of its business.

THE SPARK: The Lisle, Ill., company said Monday that it will delay the IPO of SunCoke Energy Partners LP. However SunCoke said it still plans to go ahead with the IPO once market conditions get better.

The company disclosed its plans in a form filed Friday with the Securities and Exchange Commission.

THE BIG PICTURE: SunCoke announced in July that it had approved the formation and IPO of a master limited partnership. It said the partnership would probably include part of its interests in cokemaking plants in Franklin Furnace and Middletown, Ohio, and said the offering could be worth as much as $350 million.

A master limited partnership is a limited partnership that is publicly traded. It gets most of its cash flow from real estate, natural resources and commodities. There are certain tax benefits of such partnerships that some investors find attractive. SunCoke said it expected to get a cash distribution from the IPO, and said it would use those proceeds to pay down debt and finance expansion projects among other corporate purposes.

SunCoke had said the IPO would close in the fourth quarter at the earliest.

THE ANALYSIS: Brean Capital analyst Lucas Pipes said the news was disappointing, but he maintained a "Buy" rating on SunCoke shares with a price target of $22. Pipes said he thinks market conditions will improve toward the end of the first quarter of 2013, meaning the IPO would happen sometime after that.

SHARE ACTION: SunCoke stock fell $1.15, or 7.1 percent, to $15.10 in afternoon trading. Shares of SunCoke have gained 22.7 percent from their closing price June 25.

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