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Rhino Resource Partners L.P. made a public offering of around 1.1 million units representing limited partner interests. The partnership will allow the underwriters of the issue a window of 30 days to purchase up to 165,000 additional common units to cover over-allotments, if necessary.
Rhino Resource Partners intends to utilize the net proceeds of the issue, including proceeds from any exercise of the over-allotment option, to lower outstanding borrowings under its credit facilities. The units will be offered in accordance to the shelf prospectus previously filed with the Securities and Exchange Commission.
The partnership follows this practice of issuing new units and utilizes the proceeds to repay its borrowings from its credit facilities. In Jul 2011, the partnership issued 2.5 million units priced at $24.50 per unit and utilized the proceeds to replenish its credit facilities.
Rhino Resource Partners ended the second quarter of 2013 with nearly 15.38 million of outstanding units. The partnership presently distributes $1.78 per unit to unitholders on an annualized basis. The proposed issue of common units will increase the total cash distribution amount. However, the partnership has sufficient cash generation capabilities to meet the additional cash distribution burden.
Rhino Resource Partners has taken initiatives to make strategic acquisitions and monetize assets not featuring in its long-term goals to create a strong generation portfolio. These initiatives have started to reflect in its quarterly results, with Rhino Resource Partners surpassing the Zacks Consensus Estimate in three out of the last four quarters.
Rhino Resource Partners currently has a Zacks Rank #3 (Hold). Other operators in the sector having a favorable Zacks Rank are Alliance Holdings GP, L.P. ( AHGP - Snapshot Report) , Alliance Resource Partners L.P. ( ARLP - Snapshot Report) and Suncoke Energy Partners, L.P. ( SXCP - Snapshot Report) . Alliance Holdings GP and Alliance Resource Partners LP retain a Zacks Rank #1 (Strong Buy), while Suncoke Energy Partners has a Zacks Rank #2 (Strong Buy).