UK Coal Share Discussion Threads

[strutt12] 10/12/2012 10:35

Jeffian,

"And that is worth.....?"

The last full independent valuation of the Group's property assets, which was undertaken in December 2011, valued the Group's property assets at £282.3 million in accordance with the appraisal and valuation standards published by RICS (the Last Independent Property Valuation). These external valuations were reviewed by management as at 30 June 2012 and revised to £271.7 million to reflect valuation changes and disposals since the Last Independent Property Valuation.

[jeffian] 10/12/2012 09:55

You're probably right, Shareho1der, but too late for many of us here, I suspect!

[shareho1der] 10/12/2012 09:22

jeffian.

as always, the shareholders come last in any assets distribution.

this share is best avoided.

[semper vigilans] 10/12/2012 09:21

Peel obviously had a bit of say in this - where next for them - sit and wait?

[jeffian] 10/12/2012 09:16

Yes there is. I am assuming that the mining business is all but a write-off and we are left with 25% of a property company with unspecified assets, which is controlled by the pension fund which also has first dibs on profits generated before divis can be paid to ordinary shareholders. And that is worth......?

[shareho1der] 10/12/2012 09:11

people are reluctant to jump into this, there are still loads of uncertainty.

[jeffian] 10/12/2012 08:54

Well the market seems to like it but I can't really get my head around exactly what we have left. It would have been nice to have seen a re-stated balance sheet. Perhaps the analysts will get to work and spell it out for us.

[crosswire] 10/12/2012 08:25

"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."

[crosswire] 10/12/2012 08:21

UK Coal restructures in a move to safeguard 2,500 jobs10th December 2012 http://www.thebusinessdesk.com/mobile/westmidlands/news/406358-uk-coal-restructures-in-a-move-to-safeguard-2-500-jobs.html?news_section=28388

[crosswire] 10/12/2012 08:17

DAW Mill colliery owner UK Coal has completed a restructuring which the company says will safeguard 2,500 jobs.Chairman Jonson Cox said the move was a "final chance" for the company's mining operation to adopt ways of working that make the business viable.The restructure, which has taken almost nine months to negotiate, sees the creation of two divisions covering mining and property with the company renamed Coalfield Resources.Control of the mining division has been handed to a new "employee benefit trust" although Coalfield Resources retains a 90% stake in the economic rights.The company will retain ownership of 24.9% of the property division, Harworth Estates, with the remainder passed to pension funds in return for a £30m cash injection and their support for the mining business.Mr Cox said: "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 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."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%, and started to change working practices, our inherited cost structure still remains too high and labour productivity too low."He added: "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."The restructure sees UK Coal directors Owen Michaelson and Gareth Williams become chief executive of Harworth Estates and managing director of Mine Holdings respectively.Finance director David Brocksom is also standing down with Harworth Estates FD Jeremy Hague taking on the role. Kevin McCullough, currently chief operating officer of RWE npower, will join as chief executive of Mine Holdings early next year.

[ivancampo] 10/12/2012 08:01

Agree, better than expected.

[empirestate] 10/12/2012 08:00

blimey, they have done a decent job really, considering there appeared to be nothing left for shareholders at one stage

[ivancampo] 10/12/2012 07:38

It doesn't matter, we own a 24.9% of a property company now.

[strutt12] 10/12/2012 07:21

I don't like the sound of this!!

" our inherited cost structure still remains too high and labour productivity too low."

[mysticmagic] 07/12/2012 09:21

Today is more of a gamble on what we think will happen. Sustainability has been a key word in every release they have made so I hedging towards that.
What you say is also true. We won't know with 100% positivity until the disclosure this weekend.
I remember when he first came though he promised sustainability and eventual profit growth. He has in a large part, moved to pastures new. I think it is because he believes it is a job well done.
Others, and it could be rightly so, will believe it is because his 'job well done' is awarding himself a huge payout.

In these times, when failure is often rewarded much more than success, I can see where they are coming from.

It depends in a large part on whether you think he values his integrity. I do so am hedging towards that.

What I do know is that the initial proposal was geared towards the shareholders as much as it could have been. This is in my eyes a positive.

I know some things have changed since then but the principle of the design has remained pretty close.

We are no longer responsible for the pensions and could even be sold off in the future though that is a highly speculative position with a vast amount of risk.

Let us see what the weekend brings. I am holding though

[jacks13] 06/12/2012 17:50

mysticmagic - I may have missed something but from what I have been reading in recent announcements the fine details of the restructuring has not been made clear. I anticipate that Propco will be run primarily for the benefit of the pension funds so who knows where that might lead.
Conversley, if Propco's assets are beefed up by future development UK Coal could presumably sell their interests and distribute/invest elsewhere!

[mysticmagic] 06/12/2012 17:02

Jacks It was my understanding that the trustees would be under a seperate company and therefore have a seperate share issue.
I think the 5 million of dividends would be allocated to the trustees and then a quarter of whatever is left is allocated to us.

The rights issue is a concern as we now have a standard listing but I think they have went to great pains to enable us to become sustainable and a share issue would destroy that, so personally I don't think that is in the pipeline.

[mysticmagic] 06/12/2012 16:43

Strutt I think we will be in a better position because the pension liability has been removed.
I can see us making more profit with 24.9% and no pension liability in the future than having 100% land and pension liability over the past year.
I think the streamlining that will be done in the next two years will see a huge return on our investment.

Investments such as the windturbines will slowly but surely start to pay out.
The pension has been a cross to bear for years. It is gone as far as we are concerned and losing what amounts to 75% of our property portfolio is a small price to pay.

[jacks13] 06/12/2012 16:35

strutt - if the £30m is used to release value in the property portfolio by obtaining planning consents etc. then the increase in asset values/cash on the Propco balance sheet will be reflected in UK Coal's balance sheet, to the tune of 24.9%. As mysticmagic says the holding in Propco is akin to an 'associate company' holding so that UK Coal will take its percentage of Propco's assets, liabilities and profits and add them to its own when reporting. As regards cashing in the property assets, if UK Coal no longer operates the mines, nor has any pension funds liabilities then the need to raise cash is no longer an imperative.

I don't hold these at the moment but I am considering getting back in if or when I can see that there is value to be had. Two things concern me.

1. It's my understanding that all holders of the same class of shares have to be treated equally. So for the pension trustees to be getting an assurance of the first £5m of any dividend indicates that they may be getting a senior class of shares and UK Coal a different and subordinate class. So the chances of a dividend payment for UK Coal appears to be off the agenda, but more importantly it leads to my second concern...

2. If the trustees are able to issue by way of an open offer or rights issue more shares in the company without the say so of UK Coal then existing shareholders holdings could become severely diluted in due course.

[jeffian] 06/12/2012 15:56

Not much, I suspect.

"If the restructuring plan is successfully implemented in the interest of securing a more stable platform for the Company, shareholders may face dilution of their holdings."

[strutt12] 06/12/2012 14:55

Magic,

The Trustees are getting 75.1% to remove the pension liability from Mine Holdings, they are injecting £30 Million into Propco for working capital, they have the controling interest in the business so they will say if any money will come our way. In the past UKC has used the money raised from land sales to bolster their accounts and to lower the amount of money they are losing, this will not be available to Mine holdings going forward. Propco will be the company with tangable assets, of which we will have no control over. Therefore how do you value the business after the restructuring?

[mysticmagic] 06/12/2012 09:11

I believe that the 30 million is part of the deal which sees the trustees getting 75% of the property portfolio.
The way I have understood it is that the property portfolio in essence no longer belongs to us. What will happen is that we (UKC)) will receive 24.9% of property profits each year in the same way that it would be if we had bought a stake in an external company.
In my opinion once the dust settles we will have a bullish share.
We are guaranteed 24.9% of property profits each year as well as the revenues from HPG.
I.E. It will receive 20% of all future revenues generated from the sites at Kellingley, Thoresby and Harworth and will receive 10% of all future revenues generated from Stillingfleet.
As for the mines, I believe one of two things will happen.
They loss makers will be phased out with the exception possibly of Daw Mill. I am of the opinion that it has purposely been run into the ground and once the restructuring has taken place it will start to 'produce' again.
That is a personal opinion though. Even if this does not happen our shares should rise significantly within the next 18 months as we will be on the whole generating profit.

[strutt12] 05/12/2012 11:45

Jacks13

That's a given, what I want to know is whether the Trustees are receiving new shares for their £30 Million cash contribution, and at what price??

"The Company made strenuous attempts to secure an option for Shareholders to subscribe part of the equity of the Property Division"

[jacks13] 04/12/2012 18:45

strutt - it looks like UKC Group will act as custodian of the interests belonging to UKC shareholders, 24.9% of the Propco assets and earnings will show up on the UKC accounts.