UK Coal mulls a liquidation after mine fire

 
Suzie Neuwirth
BRITAIN’S largest coal producer UK Coal said yesterday it remained in talks with interested parties over the future of its mines following a fire which caused the closure of its largest mine.

The disaster at the Daw Mill colliery in Warwickshire in March resulted in most of the 650 staff being made redundant and heavy losses for the company.

According to a report in the Financial Times on Tuesday, UK Coal’s directors are proposing a liquidation, which would enable a subsidiary to be created which would run the existing mines and keep the remaining workforce employed. Creditors would reportedly receive 32p per pound under the proposal.

In a statement yesterday, UK Coal neither confirmed nor denied that it was looking to liquidate but said that it was in discussions with a “wide range of interested parties” over the remaining mines.

Chief executive Kevin McCullough said that there had been “unhelpful and inaccurate speculation” and that the company’s main focus now is preserving 2,000 jobs.

“As with all deals of this complexity there are many moving parts but I hope we are close to securing a way forward for our remaining mines,” he said.

“There will undoubtedly be some difficult decisions as we have had to look at all possible options, but there is a good business here with 2,000 families depending on our workforce and I am confident we will be able to announce more news in the coming days.”

UK Coal, which is part-owned by FTSE-listed Coalfield Resources, underwent a restructuring last year and was separated into two units: UK Coal and property business Harworth Estates.

Coalfield Resources said yesterday that it has had to secure a loan after UK Coal was unable to pay back £3.6m of its restructuring costs.

“Without last December’s restructuring, the effect of the Daw Mill fire would have directly threatened the mining, property and holding company viability and most likely would have wiped out remaining shareholder value across the entire group,” it said.