Tuesday, March 3, 2015

News: Harworth Group plc created in £150m deal

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Rotherham-based Harworth Estates, one of the largest property and regeneration companies across the North of England and the Midlands, is closing in on being completely owned by Coalfield Resources plc as terms have been agreed for a £150m deal.

Listed on the London Stock Exchange, Coalfield Resources was until December 2012 the parent company of the UK's largest coal miner, UK Coal. In one of the most complex restructurings in UK corporate history, Coalfield Resources, which was previously known as UK Coal plc, split its operating businesses into two separate units - property and mining.

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Harworth Estates, which is based on its flagship development at Waverley in Rotherham, manages around 31,370 acres across some 200 projects, with consent for 8,000 new homes. By regenerating former coalfields and brownfield land, net assets have increased to £249m from £235m in 2013, on a property portfolio value of £290m, up from £277m in 2013. Net profit before tax for the year ended December 31 2014 was approximately £3.5m.

The restructure saw Coalfield Resources own 24.9% of Harworth Estates, with 75.1% having passed to the Pension Funds in return for a £30m cash injection and their support to the mining division. A year later, administrators were called in for its struggling mining division.

Now terms have been agreed for Coalfield Resources to acquire the remaining 75.1% for £97m in cash and through the issuing of new shares. The company proposes to raise approximately £115m which will be used to fund the purchase and provide additional investment capital.

The £150m deal represents an approximate 20% discount to the net asset value of Harworth Estates and the placing and offer are being fully underwritten by bank and asset manager, Investec.

The directors believe that the new structure will allow the group to access capital on better terms than it has in the past, accelerating existing investment opportunities and increasing the potential to acquire new land for redevelopment.

On completion of the transaction, Coalfield Resources plc is set to change its name to Harworth Group plc to reflect that it is now a property company.

Jonson Cox, chairman of Coalfield Resources, said: "Coalfield Resources is delighted to announce this transaction with the Pension Protection Fund. It re-establishes under single ownership the property business of Harworth Estates and we welcome the PPF as a 25% investor. It will complete the transformation of the company to a specialist brownfield property developer.

"We will be in a strong position to take full advantage of our proven skills in the property and regeneration markets and to deliver value. I would like to thank our existing and new shareholders for their support in achieving an important milestone for the business."

Harworth Estates website

Images: Harworth Estates

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