June 23, 2015 Read More →

SEC Warned that Consol Coal IPO Overstates Coal Demand with “Incomplete and Misleading Disclosures”

Greenpeace notified the Securities and Exchange Commission (SEC) this week that Consol Energy did not adequately disclose risks, including declining demand for coal, in the initial public offering (IPO) of CNX Coal Resources, a master limited partnership that would manage Consol’s thermal coal operations in Pennsylvania

In a letter to the SEC, Greenpeace warned that Consol Energy “may have provided materially incomplete and misleading disclosures, which if not corrected, may fall out of compliance” with SEC rules. CNX Coal Resources launched the IPO on June 15.

Along with the letter to the SEC, Greenpeace submitted a memo by the Institute for Energy Economics and Financial Analysis (IEEFA), which analyzes the overly optimistic projections provided by Consol in its S-1 risk disclosure document. The IEEFA memo states that Consol’s risk disclosure:

  • Uses data from the Energy Information Agency (EIA) and Wood Mackenzie in a misleading manner, including outdated Wood Mackenzie data for the global coal market. More recent Wood Mackenzie assessments of the global coal market reflect a far more cautious outlook than those cited by Consol.
  • Does not adequately portray nor analyze Consol’s value losses in recent years.
  • Exaggerates the quality of their coal plant customer base. Most of the coal plants in the CNX portfolio are merchant plants, which are the most vulnerable to financial stress and are among the least favored option of utilities in this market.

“Investors that bet on coal have lost big in recent years, in part because of the coal industry’s failure to account for changing energy markets and rules to safeguard our health and environment. Potential investors should be aware of the significant financial, environmental, and reputational risks of coal investments that come with a rapidly changing energy industry – risks that the coal industry itself has largely failed to recognize, much less report,” said Diana Best, Greenpeace Coal Campaigner.

The Greenpeace letter to the SEC is available here.

The memo from the Institute for Energy Economics and Financial Analysis is available here.

Contacts: Diana Best, Greenpeace Coal Campaigner, [email protected]

Karl Cates, Institute for Energy Economics and Financial Analysis Director of Media Relations, [email protected], 917-439-8225

Joe Smyth, Greenpeace Communications, 831-566-5647, [email protected]

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