Peel supports UK Coal fundraising
NORTH West property group Peel today said it would support UK Coal’s £100m fundraising plans and take up the company’s share offer.
UK Coal plans to raise £100m to help the company reduce its debt and “provide greater financial flexibility in the current environment”.
Peel Holdings is UK Coal’s largest shareholder with a 28.28% stake through its subsidiary Goodweather.
It has said it will support the mine operator’s fundraising and has agreed to take up its entitlement of the offer so its share is not diluted.
Doncaster-based UK Coal is to issue just over 142m new shares at 75p per share. UK Coal’s shares closed at 120.25p last night.
UK Coal said the capital raising would give it “appropriate financial headroom” as it completes its investment phase in its deep mining business, and would position the group to take advantage of longer term opportunities in its mining and property activities.
The company, which reported a half year loss before tax of £81.5m last month, has also proposed amendments to the terms of its banking facilities, which are conditional upon the capital raising being successful.
The capital raising, which is being underwritten by Evolution and Numis, will be voted on at a shareholder meeting scheduled for October 9.
Chairman David Jones said: “In the recent past, UK Coal has been constrained by the pricing from legacy contracts and production difficulties in certain of its deep mines.
“Management has taken actions to address these issues, in particular investments to produce a modern, efficient mining business with substantial and economically accessible reserves; considerably increased development work to improve the reliability of future production volumes; and putting in place new contracts on significantly improved terms.
“The board is, therefore, confident that the combination of the improving prospects for our mining activities and the significant value upside in our property business provides UK Coal with the opportunity to deliver strong value growth to shareholders.
“Today’s announced capital raising will secure a capital structure appropriate for the business going forward, and we welcome the support of our largest shareholder, which shares the Board’s belief in the value we can create.”
Reporting its half year figures, UK Coal saw deep mine production increase to 3m tonnes, while surface mine production was 700,000 tonnes. The combined total was the same as last year.
In its Harworth Estates Property division, the value of its property portfolio dropped from £422.3m to £382.2m. However, UK Coal expects “significant planning progress” in the second half of the year.
UK Coal has estimated the value of its property estate at £886m in 2014.
Total group net debt increased to £190.8m.
