Britain’s biggest coalminer UK Coal completed a multi-million pound restructuring with just hours to spare yesterday, safeguarding the jobs of 2,500 miners.
The rescue plan, one of the most complex ever undertaken, was signed off at 6am yesterday morning after the Doncaster-based company and its advisers, who stand to make millions of pounds from the restructuring, worked on Friday, Saturday and Sunday nights to thrash out a deal.
Failure would have meant the company going into receivership, closure of the mines, the loss of 2,500 jobs with no redundancy pay and the taxpayer having to bail the company out.
Chairman Jonson Cox said: “We could have been announcing the end this morning. I’m hugely relieved we’re here. This has given our mining business a final chance.
“Our mining workforce needs to grab that with both hands. I hope the miners will get behind the management.”
Chris Skidmore, Yorkshire area chairman for the National Union of Mineworkers (NUM) said: “We welcome any announcement of this nature. We do need to learn the lessons of the past. Recriminations are no good at this stage. We’d seek to work together.”
He also welcomed the news that now the restructuring is out of the way UK Coal, which is changing its name to Coalfield Resources plc, will look again at re-opening the Harworth mine outside Doncaster.
“We’d welcome the re-opening of Harworth with open arms,” said Mr Skidmore.
Mr Cox said the restructuring, which will leave the mining business mostly free of bank debt, will give the mines “a fighting chance of survival”, but he warned that the cost structure remains too high and labour productivity is too low.
“The mine management need to properly plan. They have got to deliver the next coal panel before the current one finishes.
“We also need to tackle workforce allocation – which jobs can be safely done by two people rather than three.”
Mr Cox said management will be strongly boosted by the appointment of Kevin McCullough, chief operating officer of RWE npower, as chief executive of the mining arm. Mr McCullough will join early next year.
Mr Cox said the other significant appointment is Stephen Hutchinson, formerly finance director for the Bridon Group, who joined a few weeks ago. Mr Hutchinson is taking over the role as finance director for Mine Holdings, the new name for the mining division.
“I’m very pleased with the appointment of Kevin McCullough and in Steve Hutchinson we will have very strong financial control,” said Mr Cox.
The company paid out £3.5m in professional fees during the six months to June 30 – £1.9m for work on the refinancing and £1.6m for advice on the general restructuring.
The total bill for professional fees could be double this, but Mr Cox said the final bill will be far less expensive than an insolvency.
“The cost of unravelling the business would have been unthinkable,” he said. “If the company had gone into receivership it would have cost tens of millions.
“With this deal the miners will be working to keep themselves in a job and pay off their pension deficit. The shareholders will get no value for the foreseeable future.”
Advisers included PwC, DLA Piper, Grant Thornton, Walker Morris and Freshfields.
The restructuring has split the company into two businesses – Mine Holdings and property division Harworth Estates. Ownership has been broken up between the company, a newly-established Employee Benefit Trust and the Pension Fund.
Under the restructuring, the Pension Fund now owns 75 per cent of Harworth Estates in return for a £30m cash injection.