UK Coal Share Discussion Threads

[strutt12] 12/12/2012 08:05

Has the company changed it's ticker??

Found it CRES

[ivancampo] 11/12/2012 14:05

Added at 7.8, nice.

[ivancampo] 11/12/2012 08:09

One assumes some Director buys are imminent by way of support for the restructure plus positive analyst coverage.

[crosswire] 11/12/2012 07:01

UK COAL rallied 1.6p to 8.85p after a financial restructuring, and a new name, gave shareholders a better deal than the market had expected.

Read more:

[crosswire] 10/12/2012 21:39

UK Coal, Britain's biggest coal miner, makes final bid for survival
Britain's biggest coal miner, UK Coal, has restructured in a last attempt to survive.

Chairman Jonson Cox explains how he plans to see the industry to a fitting end.

Chairman Jonson Cox is trying to turn around the group, which operates three deep mines in England and employs around 2,500 people.


By Emma Rowley6:48PM GMT 10 Dec 20127 Comments


Jonson Cox may be forgiven if he is a little bleary-eyed. Monday saw the chairman of UK Coal, Britain's biggest remaining coal miner, announce that the company's restructuring effort, eight months in the works, had been completed.
Cox does not hide the truth, that the group came very close to collapse.

"I can't tell you how many moments there have been [where he thought the restructure might not happen]," he says. "This is very complex, as it's involved deals with customers, the pension fund, the pension regulator, the Pension Protection Fund, the Government, Coal Authority – and I've probably left someone out.

"There have been moments where I thought we were on track and moments where I thought we were not going to make it, and it was exactly the same over this weekend. It's not done 'til it's done. And [Monday] morning at six o'clock I got a phone call to say it was completed."

In a last-ditch attempt to ensure the company's survival, the restructure splits the struggling coal mines off from valuable property assets. The group has been renamed Coalfield Resources, to reflect how it is "making the most of what is left of the coalfields".


The hope is that the mining arm can now achieve another 10 years of production, led by the newly-announced chief executive Kevin McCullough, currently chief operating officer of RWE npower. Meanwhile, shareholders should get some value through their 25pc stake in the property arm, called Harworth Estates.

For Cox, at the helm of a company born out of the privatisation of the coal industry in 1994, the challenge is to give the British industry the exit it deserves.

"I recognise fully that coal, as it is currently used to produce power, has a finite lifetime, because we have to decarbonise the energy supply chain," he says. "This industry is towards the end of its life. Let's give it a managed landing, rather than a catastrophic insolvency.

"We've 2,500 very skilled miners, probably another 3,000 people in the supply chain. This is making sure they can get to their retirement, wind up the industry properly, pay off the liabilities, manage all the environmental consequences. Had we not pulled off the restructuring, it would have all ended catastrophically. That's not in anyone's interest."

It has been a long road for Cox, who is not from a mining background. A Devon boy, his career has seen him do stints as managing director of Yorkshire Water and chief executive of Anglian Water Group. He was brought into UK Coal two years ago – by its banks, led by Lloyds, and its biggest shareholder, property investor Peel Group – as it teetered on insolvency, not least through decisions to pay its miners up to £1,000 a shift to incentivise output.

"It had lost £269m in three years, bank debt and customer debt was £245m, pension debt £450m, equity value £90m. Debt overwhelmed equity," says Cox.

"We had a great first year, stopped the rise in labour costs which had gone up 38pc in five years, brought costs down, redid the pension deal, halved the bank debt in a year. So it all looked like, through 2011, it was going well."

And to those who question the market for coal, Cox checks the figures to point out that in the last 24 hours coal has met 44pc of UK energy needs. "Coal is keeping the lights on at the moment."

But things go wrong very quickly in mining, given its high fixed costs – which was soon brought home to him. "A year ago, our biggest mine at Daw Mill, as a result of planning and production decisions made in 2009, ran into the sand."

One mining face had been dug in the wrong direction, meaning the structure was fighting against geological forces, while elsewhere the huge struts holding up the roof were looking precarious. "Imagine dominoes," explains Cox.

As the company once again careered towards insolvency – which would have returned it to the state, as no insolvency practitioners will take on such a safety liability – management set out a plan.

As a result, the mines stand alone, supported by a package agreed with stakeholders which sees the pension fund foregoing some deficit payments and customers improving contracts. Daw Mill in Warwickshire, however, is set to close.

The plus for the shareholders and the £280m property portfolio, of largely old mine sites, is that they are quarantined from the mines' financial risks, including the pension deficit. The market liked it, with the shares up as much as 24pc on the FTSE Fledgling Index, as analysts judged the deal to be "in the nick of time".

Asked what the miners think of it all, Cox is careful: "We have a tremendous workforce ... there are, of course, a few who still hanker after the days when it was a state industry and it was inconceivable it could go under ... [but] when we started this process, on Friday night, if we hadn't got to where we've got to, it would have been an insolvency decision."

There's still more work to be done, he adds, such as making sure the mines are cutting coal for around half the minutes in a day, rather than closer to a third, and examining how many staff tackle each job.

"They've got just enough headroom to survive," he warns. "The next six months are absolutely critical."

[crosswire] 10/12/2012 18:48

Aon PLC : Aon Hewitt advises pension schemes on UK Coal restructuring

12/10/2012| 06:56am US/Eastern

NYSE:AON

LONDON, 10 December 2012 - Aon Hewitt, the global human resources solutions business of Aon plc (NYSE:AON), has announced that it advised the Industry-Wide Mineworkers' Pension Scheme and the Industry-Wide Coal Staff Superannuation Scheme on the restructuring announced this morning by UK Coal PLC.

Under the terms of the restructuring, UK Coal has been split into separate mining and property businesses. The mining business will continue as employer sponsor of the pension schemes. In return for giving up any potential claim against the property business, the two pension schemes have a 75.1 per cent shareholding in the new property business, Harworth Estates. The pension schemes have also injected £30m of capital into Harworth Estates to ensure that it has the necessary funds to develop the properties and thereby achieve the maximum value for the pension schemes in the long term. Overall, the restructuring has helped to protect the pension benefits of the schemes' 6,800 members.

Donald Duval, partner at Aon Hewitt and actuary to the pension schemes said:
"The split of the business, with the pension schemes taking the majority share in the property business, is an innovative solution to the problem of funding the pension schemes while allowing the companies to invest in the business.

"This is an excellent outcome for the business, the trustees and the members - particularly as the alternative might well have been the schemes entering the Pension Protection Fund, which would have meant much-reduced benefits for the members."

Media Contact:

Colin Mayes Adam Leviton
Aon Hewitt Capital MSL
01372 733689 020 7307 5339
[e-mail]@capitalmsl.com
Notes to Editors

About Aon Hewitt
Aon Hewitt is the global leader in human resource solutions. The company partners with organisations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit www.aonhewitt.com.

Sign up for News Alerts:

Follow Aon Hewitt on Twitter @AonHewittUK


About Aon
Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.

[crosswire] 10/12/2012 18:45

BUSINESS NEWS RSS FEED

UK Coal deal rescues North-East mining jobs

6:00pm Monday 10th December 2012 in Business

News By Andy Richardson


UK Coal has agreed a deal that saves 62 jobs at Park Wall North mine near Crook, County Durham

A RESCUE deal has been agreed that saves the jobs of about 200 North-East coal miners.

Bosses at UK Coal, which employs 2,500 workers nationally, including 62 at a surface mine near Crook, County Durham, admitted the company had faced collapse in the new year unless major restructure plans were completed.

Chairman Jonson Cox said the overhaul was a "final chance" for the company's mining operation to adopt ways of working that made the business viable.


Britain's biggest coal producer, which will now be named Coalfield Resources, has split its operations into two businesses – a mining arm called Mine Holdings and property division Harworth Estates.
Ownership of the Doncaster-based group has been broken up between the company, a newly-established employee benefit trust and pension funds.
Under the restructuring, the pension funds now own 75 per cent of Harworth Estates, which has 30,000 acres of land and other property, in return for a £30m cash injection.
The company, which generates about 5 per cent of Britain's electricity requirements, slumped to a loss in the first half of the year as production at its mine near Coventry plunged and it struggled to manage a huge pension deficit.


In addition to safeguarding jobs at Park Wall North mine in County Durham the deal has secured the immediate futures for 127 workers employed at two mines near Ashington in Northumberland. A further 20 people are employed by the company in this region and its operations support about 200 North-East supply chain jobs.

Mr Cox added: "The restructuring has helped to safeguard 2,500 highly skilled and well-paid jobs, a skilled supply chain, and created a funding plan for the £450m pension deficit that UK Coal has been burdened with."
The group also saw several changes among its board of directors as part of the shake-up, including the appointment of RWE Npower's chief operating officer, Kevin McCullough, as chief executive of Mine Holdings
Mr Cox explained: "This has been a restructuring of unprecedented scale and complexity for this size of company, dealing with a legacy structure that was inherited on the privatisation of British Coal in 1994. I'm delighted that we've succeeded in completing it. Without it, it was almost certain that the coal mines would have been unable to trade beyond the first quarter of 2013."
"The support provided has given a final chance to the mining business, mine management and the workforce, to adopt the changes needed to ensure safe, reliable and efficient production for the next 5-10 years. While we have successfully reduced deep-mine manpower costs by 12.5 per cent, and started to change working practices, our inherited cost structure still remains too high and labour productivity too low.

"On the property front, our successful sales programme of the last two years has enabled us to halve the group's bank debt, in turn allowing this restructuring to proceed. We now look forward to achieving the medium and long term realisation of value from the portfolio, for the benefit of shareholders and the pension funds."

[deanroberthunt] 10/12/2012 18:17

been split for a takeover of the property imo.

[treble in 1999] 10/12/2012 17:56

I remember Peel getting there hands on the old Bridgewater estates, and look what they have acheived with that. Massive increase in value.

[treble in 1999] 10/12/2012 17:55

ivancampo

Try increasing the value by 4, when planning is through.

£1120+30-70= 1080

25% is 270m.

No 50% discount, its land

300m shares, top value with planning 90p.

Depends how long it takes to bring to fruition, but you never know once Peel start.

[freddie ferret] 10/12/2012 17:19

In 2009 they were nearly 600p.

[crosswire] 10/12/2012 16:59

Back in May these shot up to 24p on good news!!!

Double digits tomorrow!

[ivancampo] 10/12/2012 16:43

So £280m+ £30m - £70m = £240m24.9% = £59.76mApply 50% discount to NAV Stake valued at £29.88m or about 12p a share.Anyone concur?

[freddie ferret] 10/12/2012 16:39

I'm happy, I'm in profit. :-8))

[deanroberthunt] 10/12/2012 15:21

notwithstanding there's still a long road ahead.....a huge chunk of uncertainty has been removed today, and the market doesn't like uncertainity...

[jeffian] 10/12/2012 13:27

strutt12,
If one takes the Book Values in the Balance Sheet, yes, but as last years's Times article mentioned above says "UK Coal's land is in the books at £384m but could easily be worth more than twice that with the appropriate planning permission." If you take your figure of £271.7m, 24.9% of that among 300m shares in issue equals 22p/share, although the pension fund's rights to the first £5m of income must impact on that. I'm just not clear whether there is more to it than that.

[muckshifter] 10/12/2012 12:12

It will be interesting to see how the mining company is structured. The original stated intention of the chairman, IIRC, was to have each mine as an independent company, which would allow them all to fail individually without destroying each other, but there is no mention of that in the current announcement, which means not only that the deep mines are going to close in fairly short order, imho, but it must also jeopardize the opencast division.

However, as the miners have always resented opencast and they now control the company, no doubt it will be sold to keep them in wages for a few months.
Regards.

[crosswire] 10/12/2012 11:38

CATEGORY: SMALL CAPS NEWS SECTOR: MININGUK Coal shares jump on completion of restructuringMon 10 Dec 2012UKC - UK CoalLatest PricesName Price %UK Coal 8.00p +10.34% Mining 18,775 -0.07%LONDON (SHARECAST) - Shares in UK Coal rose strongly on Monday morning following news that the company had completed its restructuring. The group confirmed that the restructuring of the business, which began on March 14th, had been completed and announced a raft of changes to its board of directors UK Coal will be renamed Coalfield Resources PLC later on Monday. The company's operations have been restructured into two separate businesses comprising the Mining Division, under UK Coal Mine Holdings Limited, and the Property Division, under Harworth Estates Property Group Limited. Control of the Mining Division has passed to a newly established Employee Benefit Trust which holds shares representing 67% of the voting, and 10% of the economic rights in Mine Holdings for the benefit of current and future employees of the Mining Division. The company retains 90% of the economic, and 33% of the voting, rights in Mine Holdings, but the company's and EBT's shareholding both rank behind the debt to the Pension Funds. The company owns 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 mines. As a result of the restructuring, multiple changes were made to the board of directors. Among the many changes detailed by the company, David Brocksom, Finance Director of the company, will step down on December 31st although he will continue to remain available under contract for some months to ensure a successful transition. Owen Michaelson has stepped down as a director of the company to become the Chief Executive of Harworth Estates with immediate effect. Gareth Williams has also stepped down as a director of the company to take on the role of Managing Director of Mine Holdings in the short term. Gareth will leave the group on February 28th. Jonson Cox, Chairman of UK Coal, said: "The restructuring has helped to safeguard 2,500 highly skilled and well-paid jobs, a skilled supply chain, and created a funding plan for the £450m pension deficit that UK Coal has been burdened with. Without this restructuring, the costs would have fallen by now to the British taxpayer and the Pension Protection Fund." Shares had risen 10.34% to 8p by 10:34. MF