UK Coal restructures in a move to safeguard 2,500 jobs
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.
