Wednesday, July 10, 2013

News: Focus on property as Coalfield Resources appoint administrators


Coalfield Resources plc, the company created in the restructure of UK Coal last year, is to focus solely on property after appointing BDO Administrators for its mining division.

Recovery plans for Doncaster-based UK Coal were put in place in May 2011 after they reported a pre-tax loss of £124.6m after a "further year of poor operational performance." The firm also had a £450m pension deficit.

It created UK Coal Mine Holdings Ltd and UK Coal Operations Ltd ("Mine Holdings") and following the devastating fire that closed the Daw Mill deep mine in March 2013, it has announced a way forward for the remaining mines and 2,000 employees.

The administrators have separated out the viable operations of the group and agreed a compromise with major creditors, including the Industry Wide Pension Funds, which will see the pension schemes transfer to the Pension Protection Fund. The viable mining operations have been successfully restructured and their assets will now be held in individual companies owned by a new business which will operate as UK Coal Production Ltd.

As part of last year's restructure, Harworth Estates became Harworth Estates Property Group Limited. The deal included Coalfield Resources owning 24.9 per cent of Harworth Estates, with 75.1 per cent having passed to the Pension Funds in return for a £30m cash injection and their support to the mining division.

The Pension Funds' shareholding will now transfer to the Pension Protection Fund which provides compensation to members of eligible defined benefit pension schemes. Harworth will also have to meet the running costs of Coalfield Resources to 2016.

Based on the Advanced Manufacturing Park in Rotherham, it is one of the largest landowners in the UK with access to over 30,000 acres of land. One key regeneration project is the £100m Waverley community development in Rotherham.

In a statement, Coalfield Resources, stated that "following today's further restructuring of the mining business, CfR plc will have no equity interest in, nor any responsibility for, on-going mining operations." Instead, the focus will be on realising the gross property assets of Harworth Estates, that at December 2012 were valued at £261.9m.

Coalfield Resources added that it expects to undertake equity fundraising in the next few months to help repay a £5m banking facility. One of the company's leading shareholders remains the Peel Group, the massive private real estate, transport and infrastructure investment company.

Jonson Cox, chairman of Coalfield Resources, said: "The 2012 restructuring of UK Coal separated the property and mining interests. While the catastrophic fire at Daw Mill could not be foreseen, the 2012 restructuring has justified the precautions taken to ensure that such an event would not bring down all parts of the former group. CfR plc has played an active part in finding a solution for the mines and preserving 2,000 jobs.

"The Company's role in the mining business is now at an end and the current economic value is in its shareholding in Harworth Estates. The Company will continue to be an active investor seeking long-term value for both its own shareholders and the PPF.

"We look forward to working closely with the PPF to realise the value inherent in Harworth Estates, and we wish former colleagues in mining well in their new structure."

Kevin McCullough, chief executive of UK Coal, added: "Today is very much a day of mixed emotions, but this is the best outcome that it was possible to achieve."

Harworth Estates website

Images: Coalfield Resources


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