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Partnership Initial Public Offering and Dropdown Transactions
 12 Months Ended
Dec. 31, 2015
Business Combinations [Abstract]  
Partnership Initial Public Offering and Dropdown Transactions
3. Acquisitions
Convent Marine Terminal Acquisition
On August 12, 2015, the Partnership completed the acquisition of a 100 percent ownership interest in Raven Energy LLC, which owns CMT, for a total transaction value of $403.1 million. This transaction represents a significant expansion of the Partnership's Coal Logistics business and marks our entry into export coal handling. CMT is one of the largest export terminals on the U.S. Gulf Coast and provides strategic access to seaborne markets for coal and other industrial materials. Supporting low-cost Illinois basin coal producers, the terminal provides loading and unloading services and has direct rail access and the current capability to transload 10 million tons of coal annually. The facility is supported by long-term contracts with volume commitments covering all of its current 10 million ton capacity.
The total transaction value of $403.1 million included the issuance of 4.8 million of the Partnership's common units to the previous owner of Raven Energy LLC, The Cline Group, with an aggregate value of $75.0 million, based on the unit price on the date of close. In addition, the Partnership assumed a $114.9 million, six-year term loan from Raven Energy LLC. The Partnership obtained additional funding for the transaction by drawing $185.0 million on the Partnership's revolving credit facility. The Partnership paid $191.7 million in cash, which was partially funded by SunCoke in exchange for 1.8 million of the Partnership's common units, with an aggregate value of $30.0 million. In connection with the acquisition, the Company made a capital contribution to the Partnership of approximately $2.3 million in order to preserve its 2 percent general partner interest. An additional $21.5 million in cash was withheld to fund the completion of expansion capital improvements at CMT, which is recorded in restricted cash on the Consolidated Balance Sheets.
The following table summarizes the consideration transferred to acquire CMT and the amounts of identified assets acquired and liabilities assumed based on the estimated fair value at the acquisition date:
Consideration:
(Dollars in millions)
Cash
$
191.7

Partnership common units
75.0

Assumption of Raven Energy LLC term loan
114.9

Cash withheld to fund capital expenditures
21.5

Total consideration transferred
$
403.1

Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Receivables
$
5.9

Inventories
1.7

Other current assets
0.1

Properties, plants and equipment, net
145.1

Intangible assets
185.0

Accounts payable
(0.6
)
Accrued liabilities (1)
(7.2
)
Current portion of long-term debt
(1.1
)
Long-term debt
(113.8
)
Contingent consideration
(7.9
)
Net recognized amounts of identifiable assets acquired
$
207.2

Goodwill
59.5

Total assets acquired, net of liabilities assumed
$
266.7

Plus:
 
Debt assumed
114.9

Cash withheld to fund capital expenditures
21.5

Total consideration
$
403.1

(1) Payments in excess of services performed are recorded as deferred revenue and are excluded from sales and other operating income related to the timing of revenue recognition. Deferred revenue on take-or-pay contracts is recognized into income when earned as determined by the terms of the contract. CMT had deferred revenue of $6.5 million as of August 12, 2015.
The purchase price allocation has been determined provisionally and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The Partnership is in the process of finalizing appraisals of tangible and intangible assets acquired. Accordingly, the provisional measurements are subject to change. Any change in the acquisition date fair value of acquired net assets will change the amount of the purchase price allocated to goodwill. Subsequent to September 30, 2015, minor measurement period adjustments were made to the preliminary purchase price allocation that impacted goodwill, receivables, accounts payable and accrued liabilities and are reflected in the table above.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The primary factors that contributed to a premium in the purchase price and the resulting recognition of goodwill were the value of additional capacity and potential for future additional throughput.     
The purchase price allocation to identifiable intangible assets, which are all amortizable, along with their respective weighted-average amortization periods at the acquisition date are as follows:
Purchase Price allocation to identifiable intangible assets
Weighted - Average Remaining Amortization Years
 
(Dollars in millions)
Customer contracts
7
 
$
24.0

Customer relationships
17
 
22.0

Permits
27
 
$
139.0

Total purchase price allocation to identifiable intangible assets
 
 
$
185.0


The purchase price includes a contingent consideration arrangement that requires the Partnership to make future payments to The Cline Group based on future volume, price, and contract renewals. The fair value of the contingent consideration at the acquisition date was estimated at $7.9 million and was based on a probability-weighted analysis using significant inputs that are not observable in the market, or Level 3 inputs. Key assumptions included probability adjusted levels of coal handling services provided by CMT, anticipated price per ton on future sales, and probability of contract renewal including length of future contracts, volume commitment, and anticipated price per ton. Contingent consideration is included in other deferred credits and liabilities on the Consolidated Balance Sheet. 
The results of CMT have been included in the consolidated financial statements since the date of acquisition and are reported in the Coal Logistics segment. CMT contributed revenues of $28.6 million and operating income of $18.4 million from the date of acquisition to December 31, 2015.
 The following unaudited pro forma combined results of operations were prepared using historical financial information of CMT and assumes that the acquisition of CMT occurred on January 1, 2014:
 
Years Ended December 31,
 
2015
 
2014
 
(Dollars in millions)
Total revenues
$
1,395.4

 
$
1,564.0

Net income (loss)
9.7

 
(81.1
)
Net loss attributable to SunCoke Energy, Inc.
(22.3
)
 
(114.7
)
Loss attributable to SunCoke Energy, Inc. per common share:
 
 
 
Basic
$
(0.34
)
 
$
(1.67
)
Diluted
$
(0.34
)
 
$
(1.67
)

The unaudited pro forma combined results of operations reflect historical results adjusted for interest expense, depreciation adjustments based on the fair value of acquired property, plant and equipment, amortization of acquired identifiable intangible assets, and income tax expense. The pro forma combined results do not include acquisition costs or new contracts.
The unaudited pro forma combined and consolidated financial statements are presented for informational purposes only and do not necessarily reflect future results given the timing of new customer contracts, revenue recognition related to take-or-pay shortfalls, and other effects of integration, nor do they purport to be indicative of the results of operations that actually would have resulted had the acquisition of CMT occurred on January 1, 2014 or future results.
The Partnership incurred $3.5 million in acquisition and business development costs related to CMT as well as other targets for 2015. These expenses are included in selling, general and administrative expenses on the Consolidated Statements of Operations.
Kanawha River Terminal LLC
On October 1, 2013, the Partnership acquired Kanawha River Terminals ("KRT") for $84.7 million, utilizing $44.7 million of available cash and $40.0 million of borrowings under its revolving credit facility. KRT is a leading metallurgical and thermal coal mixing and handling service provider with collective capacity to mix and transload more than 30 million tons of coal annually through its operations in West Virginia and Kentucky. KRT has and will continue to provide coal handling and mixing services to third-party customers as well as certain SunCoke cokemaking facilities. This acquisition was part of the Company’s strategy to grow through adjacent business lines. Goodwill of $8.2 million arising from the acquisition was primarily due to the strategic location of KRT’s operations.
The following table summarizes the consideration paid for KRT and the fair value of assets acquired and liabilities assumed at the acquisition date:
Consideration:
(Dollars in millions)
Cash
$
84.7

Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Current assets
$
5.2

Plant, property and equipment
67.2

Intangible assets
7.9

Current liabilities
(3.7
)
Other long-term liabilities
(0.1
)
Total identifiable net assets assumed
$
76.5

Goodwill
8.2

Total consideration
$
84.7


The results of KRT have been included in the consolidated financial statements since the acquisition date and are included in the Coal Logistics segment. Inclusive of intersegment sales of $6.5 million $5.7 million and $1.2 million, KRT had revenues of $38.6 million $41.6 million and $9.0 million for the years ended December 31, 2015, 2014, and 2013, respectively. The acquisition of KRT increased operating income by $4.9 million, $5.0 million and $1.0 million for the years ended December 31, 2015, 2014, and 2013, respectively. The acquisition of KRT was not material to the Company’s consolidated financial statements; therefore, pro forma information has not been presented.
SunCoke Lake Terminal LLC
On August 30, 2013, the Partnership completed its acquisition of the assets and business operations of Lakeshore Coal Handling Corporation ("Lakeshore"), now called SunCoke Lake Terminal LLC ("Lake Terminal") for $28.6 million. Prior to the acquisition, the entity that owns SunCoke's Indiana Harbor cokemaking operations was a customer of Lakeshore and held the purchase rights to Lakeshore. Concurrent with the closing of the transaction, the Partnership paid $1.8 million to DTE Energy Company, the third-party investor owning a 15 percent interest in the entity that owns Indiana Harbor, in consideration for assigning its share of the Lake Terminal buyout rights to the Partnership. The Partnership recognized this payment in selling, general, and administrative expenses on the Consolidated Statements of Operations during the period.
Located in East Chicago, Indiana, Lake Terminal does not take possession of coal but instead derives its revenue by providing coal handling and mixing services to its customers on a per ton basis. Lake Terminal has and will continue to provide coal handling and mixing services to SunCoke's Indiana Harbor cokemaking operations. In September 2013, Lake Terminal and Indiana Harbor entered into a new 10-year contract with terms equivalent to those of an arm's-length transaction.
The following table summarizes the consideration paid for Lake Terminal and the fair value of the assets acquired at the acquisition date:
Consideration:
(Dollars in millions)
Cash
$
28.6

Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Plant, property and equipment
25.9

Inventory
2.7

Total consideration
$
28.6


The results of Lake Terminal have been included in the consolidated financial statements since the acquisition date and are included in the Coal Logistics segment. Inclusive of intersegment sales of $13.9 million, $13.1 million and $4.3 million, Lake Terminal had revenues of $14.0 million, $13.4 million and $4.6 million, for the years ended December 31, 2015, 2014, and 2013, respectively. The acquisition of Lake Terminal increased operating income by $3.8 million, $1.7 million and $1.9 million for the years ended December 31, 2015, 2014, and 2013, respectively. The acquisition of Lake Terminal was not material to the Company's consolidated financial statements; therefore, pro forma information has not been presented.
4. Partnership Initial Public Offering and Dropdown Transactions
Initial Public Offering
On January 24, 2013, we completed the initial public offering of SunCoke Energy Partners, L.P., a master limited partnership (“the Partnership”), through the sale of 13,500,000 common units representing limited partner interests in the Partnership in exchange for $231.8 million of net proceeds, net of $24.7 million of offering costs, $6.0 million of which were paid during 2012 (the "Partnership Offering"). Of these net proceeds, $67.0 million was retained by the Partnership for environmental remediation project expenditures and $12.4 million for sales discounts related to tax credits owed to our customers. Upon the closing of the Partnership Offering, we owned the general partner of the Partnership, which consists of a 2.0 percent ownership interest and incentive distribution rights, and a 55.9 percent limited partner interest in the Partnership. The remaining 42.1 percent interest in the Partnership was held by public unitholders and was reflected in noncontrolling interest on our Consolidated Statements of Operations and Consolidated Balance Sheets beginning with the first quarter of 2013. Key assets of the Partnership at the time of formation were a 65 percent interest in each of our Haverhill and Middletown cokemaking and heat recover facilities.
Haverhill and Middletown Dropdown
On May 9, 2014, SunCoke Energy contributed an additional 33 percent interest in the Haverhill and Middletown cokemaking facilities to the Partnership for a total transaction value of $365.0 million (the "Haverhill and Middletown Dropdown.") After the Haverhill and Middletown Dropdown, SunCoke Energy continued to own the general partner of the Partnership, which consisted of a 2.0 percent ownership interest and incentive distribution rights, and decreased its limited partner interest in the Partnership from 55.9 percent to 54.1 percent. The remaining 43.9 percent interest in the Partnership was held by public unitholders and was reflected as a noncontrolling interest in the consolidated financial statements.
The total transaction value included 2.7 million common units totaling $80.0 million and $3.3 million of general partner interests. In addition, the Partnership assumed and repaid approximately $271.3 million of our outstanding debt and other liabilities, including a market premium of $11.4 million to complete the tender for and cancellation of certain of our Notes. The remaining transaction value of $10.4 million consisted of a $3.4 million cash payment from the Partnership and $7.0 million withheld by the Partnership to pre-fund our obligation to the Partnership for the anticipated cost of the environmental remediation project at Haverhill.
In conjunction with the Haverhill and Middletown Dropdown, the Partnership closed on the issuance of 3.2 million common units to the public for $88.7 million of net proceeds, completed on April 30, 2014, and received approximately $263.1 million of gross proceeds from the issuance of $250.0 million aggregate principal amount of 7.375 percent senior notes due 2020 through a private placement on May 9, 2014. In addition, the Partnership received $5.0 million to fund interest from February 1, 2014 to May 9, 2014, the period prior to the issuance. This interest was paid to noteholders on August 1, 2014.
We accounted for the Haverhill and Middletown Dropdown as an equity transaction, which resulted in a decrease in noncontrolling interest and an increase in SunCoke Energy's equity of $83.7 million, during the second quarter of 2014, representing the Partnership's common public unitholders' share of consideration paid for the acquisition, net of their share of the book value of ownership interest received.
Granite City Dropdowns
On January 13, 2015, the Company contributed a 75 percent interest in its Granite City, Illinois cokemaking facility ("Granite City") to the Partnership for a total transaction value of $244.4 million (the "Granite City Dropdown"). Subsequent to the Granite City Dropdown, we continued to own the general partner of the Partnership, which consisted of a 2 percent ownership interest and incentive distribution rights, and a 56.1 percent limited partner interest in the Partnership. The remaining 41.9 percent limited partner interest in the Partnership was held by public unitholders and was reflected as a noncontrolling interest in the consolidated financial statements.
The total transaction value of $244.4 million included the issuance of 1.9 million of the Partnership's common units with an aggregate value of $50.1 million to the Company and $1.0 million of general partner interests. In addition, the Partnership assumed and repaid $135.0 million of our 7.625 percent senior notes due in 2019 ("Notes") as well as $5.6 million of accrued interest, of which $1.0 million was included in interest expense, net on the Consolidated Statement of Operations. The total transaction value also included the applicable redemption premium of $7.7 million paid and included in interest expense, net on the Consolidated Statements of Operations. The Partnership withheld the remaining transaction value of $45.0 million to pre-fund our obligation to the Partnership for the anticipated cost of an environmental remediation project at Granite City. The Partnership funded the redemption of the Notes with net proceeds from a private placement of an additional $200.0 million of senior notes due in 2020 ("Partnership Notes"). See Note 16.
On August 12, 2015, the Company contributed an additional 23 percent interest in Granite City to the Partnership for a total transaction value of $65.2 million (the "Granite City Supplemental Dropdown"). The transaction value for the Granite City Supplemental Dropdown included the issuance of 1.2 million of the Partnership's common units totaling $17.9 million and $0.4 million of general partner interest to the Company. In addition, the Partnership assumed $44.6 million of our Notes and $0.1 million of accrued interest. The total transaction value also included interest incurred of $0.5 million, included in interest expense, net on the Consolidated Statements of Operations, and the applicable redemption premium of approximately $1.7 million. On November 18, 2015, SunCoke re-assumed the $44.6 million of Notes from the Partnership in exchange of cash from the Partnership.
We accounted for the Granite City Dropdown and Granite City Supplemental Dropdown as equity transactions, which resulted in an increase in noncontrolling interest and a decrease in SunCoke Energy's equity of $6.5 million and $1.5 million, respectively, representing the Partnership's common public unitholders' share of the book value of ownership interest received of $114.7 million, net of their share of the transaction value of $106.7 million. Subsequent to the Granite City Supplemental Dropdown and the units issued in connection with the acquisition of CMT (Note 3), we continue to own the general partner of the Partnership, which consists of a 2.0 percent ownership interest and incentive distribution rights, and owned a 53.4 percent limited partner interest in the Partnership. The remaining 44.6 percent limited partner interest in the Partnership was held by public unitholders and was reflected as a noncontrolling interest in the consolidated financial statements.
The table below summarizes the effects of the changes in the Company’s ownership interest in Haverhill, Middletown and Granite City on SunCoke’s equity.
 
Years Ended December 31,
 
2015
 
2014
 
(Dollars in millions)
Net loss attributable to SunCoke Energy, Inc.
$
(22.0
)
 
$
(126.1
)
Decrease in SunCoke Energy, Inc. equity for the contribution of 75 percent interest in Granite City
(6.5
)
 
—

Decrease in SunCoke Energy, Inc. for the contribution of an additional 23 percent interest in Granite City
(1.5
)
 
—

Increase in SunCoke Energy, Inc. equity for the contribution of 33 percent interest in Haverhill and Middletown
—

 
83.7

Change from net loss attributable to SunCoke Energy, Inc. and dropdown transactions
$
(30.0
)
 
$
(42.4
)