Chief executive makes bid for ATH division

Backed by private equity, Mr Allchurch and finance director Steven Beaumont are in talks to buy the Doncaster-based company's coal tip regeneration business.

Mr Allchurch said he hopes to sign a deal with ATH over the next week. If the deal comes off, ATH's managing director Alistair Black, who has been running the group's other division – surface mining – will take over as chief executive.

Non-executive chairman David Port would step up to the executive chairman's role on a temporary basis.

ATH has appointed a committee of independent directors to review the approach.

If successful, Mr Beaumont would continue as finance director during a period of transition and Mr Allchurch would become a non-executive until the handover is complete.

Mr Port welcomed the proposed sale saying that the regeneration business doesn't fit in with the surface mining business.

"The regeneration business is a feast or famine business," he said. "It has provided no income since 2008 and it has become a drain on the PLC. We can't develop the business and still pay a dividend."

ATH is keen to focus on surface mining and stick to a formula whereby it produces around two million tonnes of coal a year and rewards shareholders with regular dividends. It has a team in Doncaster on the look-out for new opportunities to buy new mines to replace exhausted ones.

Neither Mr Allchurch or Mr Port would place a figure on the deal, but it will be less than the 9m net cost of the original regeneration business which was bought four years ago.

At that time the regeneration business was producing good revenues from a site in Grimethorpe, which has since closed.

The business had high hopes for a second site in Langton, Nottinghamshire, but it has been plagued by planning delays.

However, Mr Allchurch said the tip washing and reclamation plant at Langton will be up and running in the next few weeks.

"We are looking at other sites," he said. "There are a couple of projects we're looking at in Yorkshire and a couple of others elsewhere in the North. It will be four to five months before we can say." Mr Allchurch said he is "reasonably confident" the deal will go through.

Mr Port praised Mr Allchurch's contribution to the business.

"I've worked with Tom for 12 years," he said. "He is incredibly competent, an excellent CEO. He has grown ATH from nothing to a 90m business."

Mr Allchurch said that after 12 years at the helm, he was ready for a new challenge.

"The regeneration business is reasonably high risk and high growth, it's not suited to a PLC structure," he said.

Earlier this month ATH announced it had gone into the red after floods and freezing temperatures hit coal production last winter. It is forecasting that full-year production volumes will be 60,000 tonnes lower than it previously thought, at about 1.75 million tonnes.

For the six months to April 4, the group reported a pre-tax loss of 2.9m, compared with a profit of 90,000 last time.

Revenues fell 3.6 per cent to 34.4m, reflecting the abysmal weather which hit the group over the winter months. ATH said it expects to pull back a lot of business in the second half.

Reclaiming the coal

ATH's regeneration business was formed when the group bought Doncaster-based A Ogden & Sons in 2006 for 25.4m, in a bid to reclaim coal from deep mines.

Ogden, a coal-recovery, land-remediation and regeneration business, focused on colliery spoil-heap reclamation projects.

The group, which was renamed ATH Regeneration, now works on reclamation projects using a large hybrid washing plant on site.

All excavated surface material from spoil heaps is washed to enable any residual coal to be recovered. Lumps of coal ranging in size from 0.5mm to 150mm can be separated from dirt using the technique.

Spoil heaps can contain about six to seven per cent coal by weight.

The coal recovered is sold direct to the power generators. Sites are then cleaned and restored with projects ranging from residential developments to community woodland.