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Based in Lisle, IL, SunCoke Energy Partners, L.P. (NYSE:SXCP) scheduled a $270 million IPO with a market capitalization of $640 million at a price range mid-point of $20, for Friday, January 18, 2013.

Four other IPOs are scheduled for the week of January 14, 2013. The full IPO calendar is available here.

S-1 filed January 8, 2013.

Manager, Joint Managers: Barclays/ BofA Merrill Lynch/ Citigroup/ Credit Suisse/ J.P. Morgan.

Co Managers: Evercore Partners/ Goldman, Sachs/ RBC Capital Markets/ UBS Investment Bank.

SUMMARY

SXCP's owns and operates two cokemaking facilities which on the average four years old, fairly new. Output is purchased by two customers on a take or pay basis, with a 13 year remaining contract life.

Top line revenue has increased the past four years and SXCP projects partnership earnings of $90 million for 2013, a 13.7% net margin on revenue.

The minimum partnership distribution is expected to be 8.25%; $53 million per year.

CONCLUSION

IPOdesktop is positive about SXCP at the price range mid-point of $20.

DISTRIBUTION PLICY

SXCP expects to a minimum quarterly distribution of $0.4125 per common unit and subordinated unit ($1.65 per common unit and subordinated unit on an annualized basis), which is an annualized 8.25% payout. To meet the minimum distribution SXCP expects to distribute $52.9 million per year.

INCENTIVE DISTRIBUTIONS TO GENERAL PARTNER

If cash distributions to unitholders exceed $0.4744 per unit in any quarter, the general partner will receive, in addition to distributions on its 2.0% general partner interest, increasing percentages, up to 48.0%, of the cash SXCP distributes in excess of that amount.

After unit holders receive a 9.445% return then incentive distributions kick in.

BUSINESS

SXCP has been recently formed to acquire, at the closing of this offering, an interest in each of two entities that own the sponsor's Haverhill and Middletown cokemaking facilities and related assets, which will result in SXCP owning a 65% interest in each of these entities.

The Haverhill and Middletown facilities have a combined 300 cokemaking ovens with an aggregate capacity of approximately 1.7 million tons per year and an average age of four years.

SXCP currently operate at full capacity and expects to sell an aggregate of approximately 1.7 million tons of coke per year to two primary customers: AK Steel Corporation (NYSE:AKS), or AK Steel, and ArcelorMittal USA, Inc. (NYSE:MT), or ArcelorMittal.

All of coke sales are made pursuant to long-term take-or-pay agreements. These coke sales agreements have an average remaining term of approximately 13 years and contain pass-through provisions for costs SXCP incurs in the cokemaking process.

MARKET

According to CRU International, Ltd., or CRU, a leading publisher of industry market research, coke demand in the United States and Canada was an estimated 19.5 million tons in 2011.

Approximately 90% of demand, or 17.5 million tons, was for blast furnace steelmaking operations and the remaining 10% was for foundry and other non-steelmaking operations.

CRU expects blast furnace steelmaking coke demand in the United States and Canada to grow by 2 million tons, or 11% by 2016 driven by a recovery in steel demand over the same time period.

GROWTH PLAN

SXCP intends to leverage its relationship with its sponsor to grow the cokemaking business.

SXCP believes the combination of steel industry reliance on imported coke and aging cokemaking capacity presents an attractive opportunity for growth in the United States and Canada.

According to CRU, blast furnace steelmakers in the United States and Canada have imported between one and five million tons of coke per year from 2005 to 2011.

In addition, approximately 24% of the cokemaking capacity in the United States and Canada, representing 4.9 million tons per year of capacity, comes from facilities that are over 40 years old, which SXCP believes will require replacement in the coming decade.

SXCP'S SPONSOR

SunCoke Energy, Inc (NYSE:SXC), $1.17 billion market cap.

Incorporated in Delaware in 2010 and headquartered in Lisle, Illinois, SXC became a publicly-traded company in 2011, and completed its two-step separation from Sunoco, Inc., or Sunoco, in 2012.

SunCoke Energy, Inc. is the largest independent producer of coke in the Americas, as measured by tons of coke produced each year, and has 50 years of coke production experience.

After this offering, SXC will own 14.1% of SXCP's common units , all of the subordinated units, all of the incentive distribution rights and the general partner.

SXCP's sponsor's total U.S. cokemaking capacity has increased from 3.7 million tons of coke per year in 2010 to approximately 4.2 million tons of coke per year in 2011 due to the addition of the Middletown facility. The cokemaking facility that SXCP's sponsor operates in Brazil has cokemaking capacity of approximately 1.7 million tons of coke per year.

SXCP's sponsor also owns and operates coal mining operations in Virginia and West Virginia which sold approximately 1.4 million tons of metallurgical coal in 2011.

SXCP OWNED PROPERTIES

400 acres in Franklin Furnace (Scioto County), Ohio, on which the Haverhill cokemaking facility is located.

250 acres in Middletown (Butler County), Ohio near AK Steel's Middletown Works facility, on which the Middletown cokemaking facility is located.

RECENT DEVELOPMENTS

Although final results for the fourth quarter of 2012 are not yet available, based on the information currently available, SXCP expects that operating results and financial performance for the fourth quarter of 2012 will be slightly lower than results for the third quarter of 2012 but consistent with the forecast for the twelve months ending December 31, 2013.

Results in the third quarter of 2012 were favorably impacted by timing of shipments, as well as by increased production reflecting higher coal-to-coke yields due to favorable weather in the summer months.

SXCP estimates that coke production for the fourth quarter of 2012 will be approximately 443,000 tons, including 153,000 tons at Middletown and 290,000 tons at Haverhill, reflecting capacity utilization of 107.0%, versus approximately 452,000 tons in the third quarter of 2012 including 154,000 tons at Middletown and 298,000 tons at Haverhill, reflecting capacity utilization of 109.0%.

In addition, results in the fourth quarter of 2012 will include a charge of approximately $1.2 million associated with accelerated depreciation for capital replacements completed in the fourth quarter.

EMPLOYEES

SunCoke Energy Partners, L.P. does not have any employees. Operating personnel will be employees of SXCP'sr operating subsidiaries.

COMPETITION

Most of the world's coke production capacity is owned by blast furnace steel companies utilizing by-product coke oven technology. The international merchant coke market is supplied by Chinese, Indian, Columbian and Ukrainian producers.

Current production from SXCP's cokemaking business is committed under long-term contracts; therefore, competition mainly affects SXCEP's ability to obtain new contracts supporting development of additional cokemaking capacity, both in the United States and internationally.

USE OF PROCEEDS

SXCP expects to net $246 million from its IPO, and $146 million from a concurrent debt placement.

Proceeds area allocated as follows:

$36 million payment to sponsor

$225 million to prepay debt

Retain $128 million to be distributed as follows

. $67 million for environmental capital expenditures

. $12.4 million to pay sales discounts to customers

. $49 million for working capital.

Source: IPO Preview: SunCoke Energy Partners, L.P.