10 December 2012
UK Coal PLC
("UK Coal" or "the Company")
Completion of restructuring and change of name to Coalfield Resources plc
UK Coal confirms that the restructuring of the business has today been completed. This process began on 14 March 2012 and has involved a wide range of parties including customers, Pension Funds, banks, shareholders, the Coal Authority, the Pensions Regulator and the Department for Energy and Climate Change.
Commenting on the restructuring Jonson Cox, Chairman, 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."
UK Coal will be renamed Coalfield Resources plc later today. The Company's operations have been restructured into two separate businesses comprising the Mining Division (under UK Coal Mine Holdings Limited ("Mine Holdings")) and the Property Division (under Harworth Estates Property Group Limited ("Harworth Estates")). Control of the Mining Division has passed to a newly established Employee Benefit Trust ("EBT") which holds shares representing 67 per cent of the voting, and 10 per cent of the economic rights in Mine Holdings for the benefit of current and future employees of the Mining Division. The Company retains 90 per cent of the economic, and 33 per cent 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 per cent of Harworth Estates, with 75.1 per cent having passed to the Pension Funds in return for a £30m cash injection and their support to the mines.
Jonson Cox continued: "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 per cent, and started to change working practices, our inherited cost structure still remains too high and labour productivity too low. All surplus cash flow from the mines will go to fund pension deficit for the foreseeable future. I hope this will assist our workforce in supporting further change.
"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.
"I'd like to thank all of our stakeholders for understanding the gravity of the situation and helping us to achieve this result."
As a result of the restructuring, several changes have been made to the board of directors:-
Keith Heller, until now an independent Non-Executive Director of the Company, has stepped down from the board and taken on the role of a Trustee of the EBT's corporate trustee. In this capacity, Keith will represent the EBT in relation to its new shareholding in Mine Holdings. Keith has agreed to remain as Chairman of the Health and Safety committee for the Mining Division.
David Brocksom, Finance Director of the Company, will step down on 31 December 2012 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 28 February 2013.
Having joined to complete the restructuring, Geoff Mason will step down as Company Secretary at the end of January 2013.
Jeremy Hague, currently Finance Director at Harworth Estates, will become the Finance Director of the Company in an executive capacity, with effect from 1 January 2013, and Company Secretary from late January. There is no further information in relation to Jeremy Hague which is required to be disclosed under paragraph 9.6.13 of the UK Listing Authority Listing Rules.
Jonson Cox will remain Chairman of the Company and will also chair Harworth Estates and shareholder meetings of the Mining Business.
In addition to the above, two significant Board appointments have been made at UK Coal Mine Holdings Ltd to strengthen the mining business:-
Kevin McCullough, currently Chief Operating Officer of RWE npower, will join as Chief Executive of Mine Holdings early in 2013.
Stephen Hutchinson, formerly Finance Director for the Bridon Group, joined in recent weeks and will become Finance Director for Mine Holdings.
Commenting on the management changes, Jonson Cox, Chairman, said:
"I'm very pleased to announce the strengthening and refocusing of the management team with these appointments. I welcome Kevin and Steve to the new mining team and look forward to the determined leadership they will bring. I also welcome Jeremy to his role in developing and safeguarding value in the Company.
"I am delighted that the mines will continue to benefit from Keith Heller's business experience in safety critical industries in his new role and I look forward to working with him in that capacity. I look forward to working further with Owen Michaelson and building on our work over the last two years, to realise value from the land portfolio.
"I thank David Brocksom and Geoff Mason for their outstanding contribution this year to the restructuring and Gareth Williams for his efforts to bring the mining business up to international standards. The Board joins me in wishing David, Gareth and Geoff well for the future."
Analysts and investors
Jonson Cox Chairman Tel: 01302 755002
David Brocksom Group Finance Director Tel: 01302 755002
Anthony Cardew Cardew Group Tel: 0207 930 0777
Alexandra Stoneham Cardew Group Tel: 0207 930 0777
Andrew Mackintosh Director of Communications Tel: 0207 930 0777