UK Coal (LON:UKC) announced that it has reached a restructuring deal with its pension trustees and customers after swinging to a loss in the first half.
Revenues dropped 23 percent to £198.3 million resulting from a material decline in sales due to a poor performance at the Daw Mill and Thoresby mines, which saw production fall to 3.3 million tonnes of coal from 4.1 million tonnes a year earlier.
Average sales prices rose to £2.43 per gigajoule (GJ) from £2.36/GJ in the first half of 2011, partly offsetting the decline in sales.
As a result, Britain’s biggest coal miner swung to a half-yearly loss of £6 million from a profit of £35.2 million.
The group’s bank debt rose to £66.1 million from £54.7 million at the end of 2011.
“The production problems and the risks of operating Daw Mill in its current structure, when combined with the pension deficit and the level of bank and generator debt, led the board to conclude that a restructuring of the business was necessary to secure a stable platform for UK Coal and its stakeholders,” said chairman of UK Coal Jonson Cox.
“We are pleased to report today that we have reached an agreement in principle with key economic stakeholders on the restructuring.”
The restructuring deal will provide £90 million to UK Coal over the period to the end of 2015.
Under the proposed plan the mining business would be left free of bank debt and would have an affordable pension deficit reduction scheme.