UK Coal, Britain’s largest independent coal producer and owner of a major commercial property and development portfolio, has today secured a crucial shareholder vote in favour of changing the company’s listing, in the first step to stave-off the foreclosure of its real estate portfolio.
In a shareholder meeting this morning at 11am in UK Coal’s Harworth headquarters, near Doncaster, 99.8% of shareholders voted in favour of transferring the company’s listing category from ‘premium’ to ‘standard’, as part of a wider debt restructuring critical to safeguarding the UK coal producer significant property portfolio.
A second vote with the same carrying majority has rubber-stamped the change the company’s name to “Coalfield Resources plc” on completion of the restructuring, in both votes discounting abstentions.
Two-and-a-half weeks ago, UK Coal warned that failure to make these changes, along with the more fundamental debt restructuring, would result in a breach of the company’s bank facilities – with Barclays Bank and Lloyds Banking Group – when tested at the year end, which would likely trigger insolvency and, in turn, enforcement over Harworth Estates, the property division of UK Coal.
The first major hurdle towards the on-going viability of UK Coal, and the prevention of a foreclosure on Harworth’s property portfolio – which six years ago was forecast as having a post-construction end value of circa £800m – will now be followed by a debt restructuring with Lloyds and Barclays.
But market deterioration has hampered progress on working up many of the key sites and the portfolio was valued at £282.3m in its last published accounts in April.
In a statement to the Stock Market, UK Coal said today: “The restructuring is a complex process and still requires the final approval of some third parties and certain regulatory clearances. One important milestone has been receipt of a clearance statement from the Pensions Regulator in relation to the restructuring. Significant progress has also been made in finalising the other relevant documents and obtaining the required clearances.
“If the restructuring is not completed, the company’s current expectation is that the covenants of the group’s bank facilities will be breached at the December 2012 test date causing the terms of the group’s bank facilities to be breached which, in the event that a waiver of these covenants cannot be obtained, would result in the bank facilities becoming repayable in the first quarter of 2013.”
The transfer to standard listing is anticipated to become effective on 4 December 2012.
Harworth Estates is one of the largest landowners in the country with around 30,000 acres of domestic business parks, development schemes and agricultural land.
Harworth has current plans to develop 85 sites covering a developable area of more than 4,000 acres, creating opportunities for building around 30,000 homes and 32m sq ft of business space over the next decade.
UK Coal has requested a £10m increase on it £50m senior debt facilities with Lloyds Banking Group and Barclays Bank, secured by the Harworth Estates property portfolio, to provide critical financial support to sustain the firm’s struggling mining division and facilitate a wider corporate restructuring.