Capital Family Holdings: Put Offer to INDEPENDENT SXCP Holders

AUSTIN, Texas–(BUSINESS WIRE)–On Feb. 12, 2019 Capital Family Holdings Inc. (“CFH”) addressed the
following letter to the Conflicts Committee and Board of Directors of
SunCoke Energy regarding the recent proposal from SunCoke Energy, Inc.
(“SXC”) to acquire all the independently held units of SunCoke Energy
Partners, L.P. (“SXCP”).

Two years ago, CFH took part in successfully stopping an offer from SXC
to acquire all the independent units of SXCP at an exchange ratio of
1.65x. CFH and multiple other SXCP holders deemed that offer deeply
inadequate and ultimately SXC was forced to pull the offer while it was
before the Conflicts Committee. As CFH addresses in the letter below, “The
last offer
of 1.65x was deemed so inadequate by unit holders that
SXC had to pull it. SXCP continues to perform well – so why would the
new offer be acceptable?

On Feb. 6, 2019, CFH wrote an email to the management team of SXC to
propose a meeting to discuss solutions – that request for a meeting was
denied.

As stated in the letter below, “If SXC feels so confident that this
is a fair offer – then SXC should abstain from voting and allow
independent SXCP unit holders to decide.
It is extremely rare for
the party making an offer to be allowed to vote on the transaction.
Given SXC’s poor record managing acquisitions and dropdowns at SXCP and
their rejected offer – further scrutiny and independence should be
required.
The current process is a mockery of shareholder
rights.”
As CFH has detailed in its previous letters on Nov. 28,
2016 and Feb. 2, 2017, a combination transaction can make sense under
the correct circumstances. CFH welcomes SXC to make a revised fair
offer or to otherwise put it to an independent vote.

CFH is a long-term investor in SXCP. We believe in the company’s future
and invested with the intent to own the business for a decade or longer,
and we thus felt it was important to share our perspective on the
proposal. We are aware that several other institutional investors have
voiced concern and are displeased with the current offer.

Capital Family Holdings, Inc. (“CFH”) is a family-owned corporation
based in Austin, TX. CFH has both private and publicly traded business
and real estate interests and we opportunistically invest across various
industries and assets. As a wholly owned company with significant
liquidity, we utilize a patient, flexible, and opportunistic approach to
investing, and generally invest with an indefinite holding period.

CFH reserves the rights to change its mind at any time as to the
merits of the proposed transaction and to buy or sell any direct or
derivative securities of SXC, SXCP, or related entities at any time.
CFH, its principal ownership, and its employees do not hold any
positions of employment, directorship, or consultancy with SXC or SXCP.
The above-mentioned letter is not a recommendation to buy or sell shares
or units in SXC or SXCP.

CFH and Simon Zolotarev can be reached at info@capitalfamilyholdings.com.

February 12, 2019

TO: The Conflicts Committee and the Board of Directors for SunCoke
Energy Partners GP LLC

To the members of the above parties,

This letter is in response to the proposal on Feb. 5, 2019 from SunCoke
Energy, Inc. (“SXC”) to acquire all of the independently held units of
SunCoke Energy Partners, L.P. (“SXCP”) for an exchange rate of
approximately 1.4 SXC shares per 1 SXCP unit. Capital Family Holdings
Inc. and its various members (“CFH”) are long term investors in SXCP,
and to our knowledge CFH is a top-10 unit holder of SXCP.

We are aghast by the current offer. The last offer of 1.65x
was deemed so inadequate by unit holders that SXC had to pull it. SXCP
continues to perform well – so why would the new offer be acceptable?

The arguments for a combination are exactly the same as before, and
SXCP’s business performance has improved and as CapEx declines next year
the company’s cash flow profile will increase. We find it troubling that
SXC had an opportunity to listen to unit holders and make positive
changes at the company, but instead chose to force an inadequate
transaction. This offer is clearly unacceptable to SXCP. The
Conflicts Committee and the Board of Directors have a fiduciary duty to
serve independent holder’s rights.

As we have detailed in our letters on Nov. 28, 2016 and Feb. 2, 2017, a
combination transaction can make sense – and in principle we welcome it
– but SXC needs to make a fair offer. If SXC feels so confident that
this is a fair offer – then SXC should abstain from voting and allow
independent SXCP unit holders to decide.
It is extremely rare for
the party making an offer to be allowed to vote on the transaction.
Given SXC’s poor record managing acquisitions and dropdowns at SXCP and
their rejected offer last year – further scrutiny and independence
should be required.
The current process is a mockery of
shareholder rights.

CFH is a long-term investor in SunCoke and believes in the future of the
company. As mgmt. knows, we have deep relationships in the steel
industry, and we have advocated to critical participants for SunCoke in
the past. We are long term owners of the company and want what is best
for our business. We expect the Conflicts Committee and Board to push
for a fair offer or to cause SXC to abstain from the vote.

Sincerely,

Simon Zolotarev

Head of Investment Division

Capital Family Holdings Inc.

Contacts

Simon Zolotarev
info@capitalfamilyholdings.com

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