Firm warns of possible ‘disaster’

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UK Coal has warned shareholders it could break financial agreements with its bankers and face financial disaster if they block moves to accelerate restructuring.

The Doncaster-based mining and property company, which reported debts of £430 million earlier this year is asking shareholders to approve a switch in its Stock Exchange listing in order to accelerate restructuring.

The company also wants to change its name to Coalfield Resources plc, which, it says, would better reflect the new emphasis of its business.

UK Coal has a ‘premium listing’ on the Stock Exchange and wants to switch to standard listing.

If shareholders agree that would mean the company won’t have to seek their approval in future for deals that involve selling off chunks of its business worth more than 25 per cent of the value of the whole company, says Jon Dunn, senior investment director at the Sheffield office of Investec Wealth & Investment.

UK Coal says the change will ‘enable the restructuring to be implemented in a shorter timeframe, with more certainty, with greater flexibility and at a significantly lower expense’.

It warns if shareholders don’t give the go ahead, restructuring will be considerably more costly and difficult and potentially impossible.

If that happened the group could end up breaching its banking covenants at the end of the year.

UK Coal says that could result in all its bank debts becoming due for repayment and the group becoming insolvent.