UK Coal Completes Restructure
Jonson Cox said splitting the company into mining and property arms and giving control of its coal mines to its pension funds was the only way to prevent it failing under the weight of bank and pension debts.
“The support provided has given a final chance to the mining business, mine management and workforce, to adopt the changes needed to ensure safe, reliable and efficient production for the next 5-10 years,” Mr Cox said.
However, he said that despite a 12.5 per cent cut in deep mine labour costs last year it would probably require a further 20 per cent reduction to make them sustainable. UK Coal, which acquired the bulk of Britain’s pits on privatisation in 1994 but now owns just three, was on Monday renamed UK Coalfield Resources.
The mining division, with deep and open cast mines, becomes Mine Holdings and the property arm retains the Harworth Estates name.
An employee benefit trust, owned by the two miners’ pension funds with almost 10,000 members, has received 67 per cent of the shares, with 90 per cent voting rights, but 10 per cent of the economic value of the mining business, which takes on the £450m pension deficit.
The pension funds also receive 75.1 per cent of Harworth Estates in return for a £30m investment to help develop its £280m property portfolio on former coalfields.
Shareholders, who include Peel Holdings, the property developer, and funds controlled by Henderson and Invesco, are left with 24.9 per cent of Harworth via Coalfield Resources. Harworth is solely responsible for most bank debt, £70m, but cannot be called on as in the past to fund the mines and is free of its pension burden.
Four power generators who are owed £80m will offer £50m in support and receive payment in coal. The pension funds will also suspend £40m of deficit payments over the next two years.
Mr Cox said other companies dealing with “legitimate” legacy pension claims could take heart. “This is one of the first really innovative deals done with the backing of the pensions regulator.”
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