UK Coal and Peel dig deep for new waste scheme

UK COAL today announced a joint venture with its biggest beneficial shareholder, Peel Group, that will see waste facilities developed at 11 properties.

The facilities will be sited at locations, valued in total at present of £14.7m, within Doncaster-based UK Coal’s Harworth Estates property arm.

The sites are mainly industrial locations that UK Coal has historically been unable to successfully develop for alternative commercial uses.

Jonson Cox, chairman of UK Coal said: “This proposed waste to energy joint venture with the Peel Group will enable UK Coal to benefit from, and mitigate the risk and cost of, the development of 11 sites in the company’s property portfolio.

“These sites have not been identified as suitable for alternative development uses. This represents part of UK Coal’s focus on simultaneously unlocking and developing the maximum value from its property portfolio.”

The tie-up will see a new special purpose vehicle (SPV) set up for each site which will be owned equally by Peel and a member of the UK Coal group.

Each SPV operation will be funded by the Peel Group. A call option, specific to each site, will be exercisable by each SPV when planning permission to build waste related infrastructure is given.

Consequently each SPV will pay £10,000 upon entering into the call option – an agreement that gives an investor the right to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period – with a further £10,000 payable on the first anniversary.

Proceeds will be put towards the group’s working capital.

Last week, UK Coal agreed to sell more than 700 acres of land to developer Taylor Wimpey for £10m.

The company also said it had completed its “strategic recovery review” started by Mr Cox when he joined the firm last year.

Earlier this year Mr Cox said UK Coal was guilty of three years of “unacceptable performance” after the company recorded a pre-tax loss of £124.6m.