Major restructuring could leave Doncaster-based UK Coal’s mining business free from bank debt and with an affordable scheme to reduce pension deficits, according to chairman Jonson Cox.
Mr Cox says the company has made significant progress towards restructuring and is making progress towards an agreement which could result in UK Coal receiving £90 million of support from pension trustees and electricity generators.
“UK Coal’s Board believes that a restructuring creates a sustainable platform, allowing us to continue to produce coal to supply power stations and get full value from the property portfolio for the Group,” adds Mr Cox.
The company has a £430 million pension fund deficit, owes customers and its bankers £138.3 million and recorded a £20.6 million loss for the first six months of the year, compared with profits of £22.2 million for the same period in 2011.
Meanwhile, revenues have fallen by 23 per cent from £256.1 million in the first half of 2011 to £198.3 million this year. Under the restructuring plan, UK mines would become separate legal entities, reducing the risk of any one mine’s failure from bringing down all mines.
Meanwhile, its pension funds would invest £30 million in UK Coal’s property business, giving them a of 75.1 per cent stake in that business.
The deal is likely to mean that existing shareholders will end up with a minority stake in UK Coal’s major property assets, after pension fund trustees insisted that the funds should have a controlling interest.
UK Coal says the investment would help to the release the latent undeveloped value in its property portfolio, which includes more than 30,000 acres of land, making it one of the largest landowners in the UK.
The deal would also free UK Coal from making any contribution towards the pension fund deficit in 2012 and 2013.