Citius Resources Share Discussion Threads

[strutt12] 12/5/2013 14:02

Dazzaa,

Do you have another reason for the falls then?

[bigbigdave] 12/5/2013 06:42

S.Times Taxpayers to bail out stricken coal giant

MINISTERS are preparing to rescue Britain's coal industry by dumping into a quango the heavy financial liabilities that threaten to crush it.

The part-nationalisation may prevent the collapse of UK Coal, the quoted miner created from the rump of British Coal. It has suffered a cash crunch since a fire closed its Daw Mill deep mine in March, putting 650 people out of work and posing a question mark over the pensions of about 10,000 former staff.

A bailout is being discussed by Whitehall departments, with talks led by the Shareholder Executive, the specialist team of corporate financiers inside the Department for Business, Innovation & Skills.

Ministers are trying to persuade the Coal Authority, a taxpayer-funded body sponsored by the Department of Energy & Climate Change, to help rescue the healthy parts of the business by taking over Daw Mill. The deal could include some of UK Coal's pension obligations. A transfer would need to be approved by the Pensions Regulator.

Michael Fallon, energy minister, said: "We are looking at whether the ownership of Daw Mill can be transferred back to the Coal Authority."

Separating the Warwickshire mine's financial burden from the rest of the business would allow UK Coal to maintain operations at its six other surface mines and two deep mines. If successful, the complex restructuring could save 2,000 jobs and preserve staff pensions.

The underground blaze at Daw Mill, which is still burning, has cost UK Coal £100m in lost equipment and £160m in lost coal, as well as halting its main source of cashflow.

UK Coal has a £543m shortfall in its two retirement schemes. If the business were to collapse, they would enter the Pension Protection Fund, the lifeboat for stricken company schemes. This could cut pension payments significantly.

The Coal Authority owns most of Britain's coal, as well as former mines. It is responsible for licensing coal mining in Britain and also has the burden of dealing with the industry's historic liabilities, such as environmental projects to restore former coalfields.

UK Coal is the country's biggest producer. Before the closure of Daw Mill, it supplied about 5% of national energy needs.

UK Coal said: "Discussions are on-going with a wide range of interested parties, including our employees, government, pension funds, the Pensions Regulator, our insurers, suppliers and customers, to find a way forward for the remaining viable mines."

Coalfield Resources, the parent of UK Coal, closed at 3.38p on Friday, valuing the company at £10.1m.

[strutt12] 11/5/2013 11:51

Notwithstanding the overall benefits of last year's separation, a direct consequence of the Daw Mill fire is that the Company has been notified by UK Coal Operations Limited ("UKCOL"), the main trading subsidiary of Mine Holdings, of its current inability to meet the indemnity it had given to the Company. This indemnity, which was given under the terms of the restructuring, was for UKCOL to indemnify the Company for the costs arising from the fees on the restructuring (the remaining balance of which is approximately GBP3.6m) and to pay the running costs of the Company (up to GBP3.0m per annum but, after a cost reduction exercise, will be around half this amount).

In these circumstances the Company has sought to obtain a banking facility, secured against its shareholding in Harworth Estates. The bank has provided a credit approved term sheet for this facility on the basis of a limited guarantee from the Company's major shareholder, Peel Holdings Limited, and an undertaking of a fund-raising event by the Company should UKCOL continue to be unable to meet its liabilities.

I'm guessing the above fundraising is what's causing the current selling

[badger1963] 11/5/2013 11:17

part taken from financial times ...

As the company careered towards insolvency, management embarked on a final attempt to ensure its survival. In a restructure last December, the struggling coal mines were split off from the valuable property assets, mostly old coal sites.

The group was renamed Coalfield Resources, to reflect it "making the most of what is left of the coalfields". The UK Coal name was kept for the mining business, after stakeholders agreed to a package under which customers improved contracts, among other measures.

The structure's plus for shareholders, was that it quarantined them from the risks - today painfully evident - around the mines, but poised them to enjoy a return from the £280m property portfolio. The hope was that the mines could achieve another 10 years of production, avoiding saddling the taxpayer with the pension burden.

[strutt12] 10/5/2013 09:05

Following the restructuring the Group now consists of the Parent Company, together with some minor subsidiaries, an investment of 24.9% in Harworth Estates valued at GBP50.3m, and an investment in the mining business Mine Holdings valued at a notional GBP1

As shown in the financial statements the Group does not recognise any economic value in its investment in Mines Holdings. As such the Group is no longer exposed to any risks from these operations.

I hope this helps ;-)

[badger1963] 09/5/2013 18:00

read not ad

[badger1963] 09/5/2013 17:58

some good points raised on here and some good points made on the LSE web site .not such a bad ad if you have the time

[the troll] 09/5/2013 17:43

just read the documents, all you need to know is in them.

as to future liquidators to the mining division 're-visiting' the deal, remember it's the Pension Fund trustees that shook hands on it ( after the Pensions Regulator approved it ) so, unless they were told a pack of lies ( & can prove they were ) it stands despite the Daw Mill fire. all IMHO.

[badger1963] 09/5/2013 10:03

COALFIELD RES. is STILL listed on the stock market as a coal mining company and not a land holding company as part of the Harworth estates group .
.As it is listed as a coal production company involved in the production of coal and given the current situation regards the insolvency issue then ,
logic says the share price of CRES will be NEGATIVELY effected
surely someone in the company ie CRES should clarify to the markets
WHAT IS IS INVOLVED IN ,
I would think that as a novice investor the first thing I would look at is
what the company does
next thing would be look elsewhere to invest ,,,,
CRES needs to be sold properly to the stock market
and marketed as a landholder with a viable future
.good luck for all those in the mining industry

[loafofbread] 06/5/2013 09:00

According to the Sunday Times, talks going on this weekend as to potential admin.

If the coal side survives I would think these should rally as we will get the payments owed.

[ivancampo] 03/5/2013 08:43

All buys again today, must move soon

[finkie] 02/5/2013 09:00

We wouldn't share in a liquidation payout though I don't believe? As mining is no longer cres baby

[greatwhitefunkmaster] 02/5/2013 08:59

I would very much like that please thank you.

[finkie] 02/5/2013 08:58

Personal view and I'm not a lawyer was the fire couldn't have been known it was not pre meditated. the split was justified on the terms given, a liquidator could not unravel that shareholder approved stoxk market relisted deal therefore.

What I need to know is are you ale to buy a 24.9% stake in Harworth for nothing now in which case it's a deal surely with no liabilities from the mining side going bust?

[strutt12] 02/5/2013 08:15

Or they go for voluntary liquidation, the creditors get 32p for every £1 of debt and we get 20p for 4p

[jeffian] 01/5/2013 23:29

Well the worst that can happen is that Mines go into liquidation and the Liquidator turns round and says "the restructuring was a device to spirit away 25% of our property assets. Give them back please".

[dazzaa] 01/5/2013 20:57

The restructured Group has no bank borrowings or bank facilities at the year-end. All facilities relating to the Group were transferred to Harworth Estates or repaid upon restructuring.

Following the Daw Mill fire in February 2013, and the resultant liabilities this created for Mine Holdings, there is an increased risk that they will be unable to honour the indemnities given to the Company in the immediate future. As discussed in the Chairman's statement, the Company has entered into negotiations to secure a one year bank facility that would enable it to meet these liabilities should they fall due. The Company has received a credit approved Heads of Terms for a suitable facility and based on this the Board believes that an appropriate facility will be entered into by the half year. The Company would look to repay the loan and raise sufficient funds to cover any liabilities not settled from the proceeds of an equity raising during 2013. The Board has received an informal commitment to underwrite an equity raising which provides comfort that the facility can be repaid.

So what's the worst that can happen?

[strutt12] 01/5/2013 15:01

Any idea when the insurance payout is due???

[loafofbread] 01/5/2013 13:30

Not many places you can buy 20p for 4p.

Over the next 5 years that will be the return.

[freddie ferret] 01/5/2013 11:59

I agree with Jeffian his comments are valid. However the fire was not anticipated and a medium term future for the mines was to be expected, therefore I think a claw back unlikely to succeed. Overall this may turn out not to be my lifetimes best investment.

[jeffian] 01/5/2013 11:02

"... of course the intention was to provide shelter otherwise where would we be."

Indeed. But my limited personal experience of company Liquidations suggests that if the Liquidator feels that assets have been removed from a company just prior to its liquidation to protect them from being seized by the Liquidator, he may be able to unscramble that deal. Does anyone know if there is any danger that could be the case here?

[dazzaa] 01/5/2013 10:52

YES Jefian remember we are talking about PLC's not some deficient adult in need guardianship there would have been many months of negotiations with the best lawyers money could buy, Daw Mill had been marked for closure or certainly talked about during that time anyway so what surprise there!

I'm no Lawyer but commonsense saves a lot of money, of course the intention was to provide shelter otherwise where would we be.