UK COAL is giving its mining business, once the bedrock of British industry, a “final chance” of survival, after completing a radical restructure of the company yesterday saving it from imminent bankruptcy.
The former state-owned behemoth yesterday completed plans to split into a privately owned property company called Harworth Estates Property Group Ltd and a new listed entity, Coalfield Resources.
UK Coal chairman Jonson Cox told City A.M. yesterday its mining business, formed of three deep operational mines in Daw Mill, Kellingley and Thoresby, is being given one last chance to improve or face extinction. Its Daw Mill mine is on the cusp of being mothballed in 2014, unless management and the workforce make changes, he said.
“There needs to be a radical change in the cost structure and working efficiency practices,” Cox said. “The surface mines could go longer but we don’t know if there will be sufficient demand for coal in the next ten years.”
The newly minted property group is to sell UK Coal’s vast tracts of land, worth around £280m, over the next ten years having already sold around £100m worth.
Under the restructure, the company’s pension fund now owns 75 per cent of the property side, with shareholders holding the other 25 per cent, diluting their ownership.
Cox said shareholders, including Invesco and Henderson, had been “incredibly supportive”.
“Of course they’re disappointed,” he said. “But they recognise that they could have got wiped out completely.”