We’re Avoiding The Romaco Resources IPO, Kentucky-Based Coal Producer

Ramaco Resources (Pending: METC) filed an S-1/A with the Securities and Exchange Commission for its upcoming initial public offering. The company intends to raise $81 million through its sale of 6 million shares at a marketed price range of $12 to $15. Of those shares, approximately 37% (2.2 million) will be sold by company insiders. Ramaco has an additional 900,000 shares as an overallotment option for its underwriters.

If Ramaco Resources completes its IPO, it would be the first coal IPO since CNX Coal Resources (NYSE: CNX) on June 2015. CNX was forced to downsize its IPO due to low demand and declining coal prices.

Assuming Romaco Resources prices at the mid-point of its range ($13.50) it would have a market cap of $527 million. The company is expected to price on Thursday evening (Feb 22.).

The underwriters for the IPO are Credit Suisse, Jefferies, BMO Capital Markets, Clarksons Platou Securities and Seaport Global Securities.

Business overview

Based in Lexington, Kentucky, Ramaco Resources is a developer of high-quality metallurgical coal with operations located in southern and central West Virginia, southwestern Virginia and southwestern Pennsylvania. The company reports that it has four near-term development projects that it expects will be fully financed through 2020 with the IPO, its projected cash flow and its current investments and cash on hand. The company reports that it made its first commercial production of metallurgical coal in Dec. 2016. Metallurgical coal is used to make coking coal, which is used to produce steel. The company is backed by Yorktown Partners LLC and Energy Capital Partners, both of which invest in the energy sector.

Executive management team

The executive chairman and director of Ramaco Resources, Randall Atkins, has served in those capacities since Aug. 2015. He has more than 35 years of experience with energy investments and financing activities. Since 2011, Atkins has also served as the chief executive officer and chairman of Ramaco, LLC. From 2009 to 2011, he worked as a banker at J.P. Morgan. He formed Brook Investment in 2004, which provided investment banking services to the energy and mining fields. Atkins has served in a variety of financing and investment capacities for numerous energy companies since 1977. He holds a Bachelor of Arts from Duke University and a Juris Doctor from Washington & Lee University School of Law.