Houston — Few changes are expected in petroleum coke and coal exports at the Oxbow Carbon's Long Beach, California, terminal after owner William Koch was ordered to sell his company, market sources said Friday. Receive daily email alerts, subscriber notes & personalize your experience. "Just because ownership changes doesn't mean the mission or business changes," a market source said. "It's a professional company. People rely on Oxbow, know Oxbow's reliable; it has strong credit. Whoever buys it will put their own corporate imprint." Koch, brother of conservative billionaire political donors David and Charles Koch, is being made to sell the company and pay an unspecified amount of damages to two private equity firms after rejecting a buyout offer from private equity firm ArcLight Capital Partners LLC in 2016, according to a ruling by the Delaware Chancery Court issued Wednesday. Judge Travis Laster ruled Koch broke the Reasonable Efforts Clause in investor agreements with the two private equity firms by "seeking to disrupt, derail, and delay an exit sale." According to the ruling, damages "must take into account the lost value of the ArcLight offer, including the lost time value of not receiving the consideration by September 30, 2016." The ruling was made in order to recover the more than $150 million in investments from the two private equity firms. A monitor has been assigned to ensure Koch follows through with the sale. One of the US' largest privately held companies and one of the biggest producers of petroleum coke for aluminum production, Oxbow did not respond to a request for comments. With a capacity of 733,000 st in six enclosed storage facilities, the Pier G at the Port of Long Beach terminal has a throughput of 7 million st/year through its terminal. The Long Beach terminal shipped 5 million mt of non-calcined petcoke and 1 million mt of coal in 2017, according to US Census data. Year to date, 2 million mt of non-calcined petcoke and 517,000 mt of coal have been exported through the terminal. With "few options to export for a Western producer," Oxbow's terminal is an important option for coal exports, said Joe Aldina, analyst at S&P Global Platts Analytics. With exports off the US West Coast limited to Oxbow's terminal in Long Beach and another small terminal in Stockton, California, producers are forced to go through Canada and Mexico. When it comes to buyers of Oxbow, "several companies could be interested. The question is if it's $2 billion or $4 billion," said the market source. The source said he has not heard of any interested buyers. "Anyone in the US putting tonnage into the seaborne market, as long as that lasts, the terminal will make money," said Aldina. "Whoever owns Long Beach will continue." If anything, the person to watch would be Koch since he "is very independent. He could break up the company and sell it to ten different people. I mean, there's no predicting," the market source said. "It depends who buys - how long he stalls...it's very unpredictable. Could go multiple directions, but I don't see any significant or substantial changes expected." Oxbow owned Elk Creek mine in Colorado, once one of the most productive coal mines in Colorado, but it was abandoned in 2013 after a fire forced a shutdown. "In the past when terminals sold we haven't seen any major changes to business," Aldina said. "Still a fairly simple business, not that they don't have risk." -- Olivia Kalb, olivia.kalb@spglobal.com -- Edited by Richard Rubin, newsdesk@spglobal.com
Business as usual is expected for exports of petroleum coke (petcoke) and coal from the Oxbow Carbon terminal in Long Beach, California despite owner William Koch being ordered to sell the company. Oxbow exported five million metric tonnes (mt) of petcoke, a million mt of coal last year, and two million mt and 517,000 mt respectively so far this year. Koch has to sell the company and pay unspecified damages to two private equity companies after rejecting a buyout offer from ArcLight Capital Partners in 2016. The sale price was not disclosed.