Hargreaves tipped as bidder for ATH Resources

ENERGY group Hargreaves Services is believed to be weighing up a bid for surface miner ATH Resources as it steps up consolidation of the UK’s remaining domestic coal mining assets.
By The Newsroom
Published 27th Jul 2011, 07:00 BST

Doncaster-based ATH yesterday said it was in “preliminary discussions with a third party which may or may not lead to an offer being made for the entire issued share capital of the company”.

ATH operates four surface mines in Scotland. Its share price has been hammered in recent months by surging fuel prices, tough geology and legacy contracts.

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News of a possible takeover lifted ATH’s shares 14.1 per cent, a 7p increase, to close at 56.5p. That values the company at £22.6m.

ATH’s debt, which stood at £34.5m in April, will be a big barrier to completing any deal.

“We’ve got an idea of what we think the business is worth,” said chairman David Port. “If we don’t reach that we won’t do it.”

He declined to name the potential acquirer. “I’m ensuring that we do the best possible thing for our shareholders,” he said.

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ATH added there is “no certainty that an offer will be forthcoming”.

ATH made pre-tax losses of £3.6m for the six months to April 3, almost double the £1.9m losses a year earlier. The results were hurt by write-offs of £4.1m.

Hargreaves, which owns Yorkshire’s Maltby colliery and also operates Hatfield deep mine near Doncaster, is thought to have enlisted ATH’s help to mine seven million tonnes of coal from a surface mine in South Wales. It recently won planning permission, subject to conditions, to reopen the Tower Colliery project.

Last year it also toyed with buying UK Coal, the debt-laden deep miner based in Doncaster.

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However, the talks came to nothing and in June 2010 Hargreaves walked away.

Shares in Hargreaves closed up 1p at 1,047p, giving it a market value of £282m.

Collins Stewart mining analyst Tim Dudley said Hargreaves was the most likely bidder for ATH.

“Hargreaves have got an underground business which means it’s kind of scrappy if they go through difficult areas or face changes.

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“I think they would like to offset that lumpiness with something more stable like ATH. Hargreaves are just trying to get more resource to feed into their supply chain.

“ATH is fairly cheap but there’s the debt that goes along with it.”

Hargreaves declined to comment.

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