Private equity group Better Capital buys debt owed by miner ATH Resources

The Doncaster-based company, which runs five mines in Scotland, said its lenders HSBC and Yorkshire Bank sold some of its banking facilities and associated rights to Becap Fund LP, a vehicle owned by Better Capital.

ATH again warned shareholders are likely to lose out in a major restructuring, but said its new lenders may give it vital funds. The group has been hammered by the falling price of coal, rising fuel costs and tough geology.

ATH said in a statement: “As a result of initial discussions with representatives of Becap Fund, the board understands that a comprehensive review and restructuring of the group’s business will be required and that, given the existing level of liabilities in the company, it is unlikely that existing shareholder value will be maintained.

“Following completion of the review the new lender may be prepared to inject new capital into a restructured business.”

Last month ATH said it had appointed Deloitte to advise on its restructuring operations and help the group assess proposals from possible buyers or investors.

The group’s banking facilities with HSBC and Yorkshire Bank were due to expire in May 2013.

During the year to the end of September the group cut its facilities from £23.5m to £18m, but warned these would need to rise from December onwards to meet its working capital requirements.

ATH did not say how much debt was acquired by Becap, or what price was paid.

The group is currently focusing on coal production from existing sites and extensions, with capital spending on new site development kept to a minimum.

ATH is 20 per cent owned by Swedish value investor Peter Gyllenhammar. Other major shareholders include Axa Framlington Investment Management and Close Asset Management.

Britain’s coal mining industry has been hurt by China’s slowing growth and the weak global economy, which is driving down prices, as well as the cost and risk of mining in the UK.

Hargreaves Services is drawing up plans to close Maltby colliery near Rotherham.

Private equity firm Better Capital has bought companies including fashion retailer Jaeger and window group Everest over the past year.

The Becap fund has net proceeds of £204m, with an investment window running from December 21 2009 to December 31 2012.