UK Coal Plc makes progress on restructuring
(Reuters) - UK Coal Plc UKC.L, Britain's biggest coal producer, said it had reached an agreement with key stakeholders on its restructuring plan as the debt-laden company slumped to a loss during the first half of the year.
The company said it reached an initial agreement with pension trustees and power generator customers to extend a 90 million pounds support package up to the end of 2015.
UK Coal owes its customers and banks 138.3 million pounds and has a pension funding deficit of about 430 million pounds.
The restructuring plan includes splitting the company's mining and property businesses. The property business would be used to service the company's bank debt.
The mining business would assume a majority of the group's pension liabilities but would be free of bank debt.
Pension funds will receive 30 million pounds annually plus any cash in the mining business from 2014.
Each mine would be turned into a separate legal entity to reduce the risk of any one mine's failure on the business.
Pension trustees will invest 30 million pounds in the company's property business for a 75 percent stake in that business and will be entitled to the first 5 million pounds of any dividend.
"These proposals look sensible but will require shareholder approval and ultimately shareholder value is likely to be limited and linked to the future success of the property portfolio," said Numis Securities analyst Howard Seymour.
The company posted a pretax loss of 20.6 million pounds for January-June, compared with a profit of 22.1 million pounds a year earlier.
Revenue fell 23 percent to 198.3 million pounds.
The company's woes have been compounded by lower production from its Daw Mill and Thoresby mines and weakening coal prices.
UK Coal's shares, which have lost three-quarters of their value this year, were down 14 percent at 6.40 pence at 01:20 p.m. British time on Friday on the London Stock Exchange.
(Reporting by Karen Rebelo in Bangalore; Editing by Gopakumar Warrier and Don Sebastian)
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