Conditional Sale of Harworth Power (Generation)Ltd

RNS Number : 9778F

UK Coal PLC

22 June 2012

 



22 June 2012

UK COAL PLC

("UK Coal" or "the Company")

Conditional Sale of Harworth Power (Generation) Limited

UK Coal is pleased to announce that its wholly owned subsidiary, Harworth Power Limited ("Harworth Power"), entered into a conditional contract to sell the entire issued share capital of Harworth Power (Generation) Limited ("Harworth Power (Generation)") for a total cash consideration of £20.3 million (the "Disposal"), to Red Rose Infrastructure Limited (the "Buyer").

Upon completion of the Disposal, £20 million is payable by the Buyer in cash with the remaining £0.3 million of the consideration being deferred.   The balance will be paid on completion and is dependent upon future rights to gas extraction.

Harworth Power (Generation) is the UK's leading coal mine methane power generator, with assets at UK Coal's Kellingley, Thoresby, Harworth and Stillingfleet mines.  Harworth Power (Generation) has installed and operates fourteen gas engines across its portfolio, which currently has an installed capacity of 26MW.  The electricity generated is either used at UK Coal sites or is exported to the grid.  In 2011, Harworth Power reported an operating profit of £2.4 million (2010: £2.5 million) on revenues of £5.5 million (2010: £3.7 million).   In March 2012, Harworth Power completed the transfer of its generating assets, at a net book value of £5.2 million, to its newly formed subsidiary, Harworth Power (Generation) Limited.

Red Rose Infrastructure Limited is managed by Capital Dynamics Clean Energy and Infrastructure, a leading clean energy asset manager.                

The Disposal forms part of the Company's plan to improve operational and financial performance and strengthen its balance sheet, in part through an asset realisation programme.  The proceeds will therefore be used to reduce borrowings and improve the working capital position of the Company.

Due to the size of the Disposal relative to the size of the Company, completion of the Disposal is conditional upon the approval of the Company's shareholders.  Pursuant to the UKLA Listing Rules, a Class 1 Circular and Notice of General Meeting in respect of the Disposal is expected to be sent to the Company's shareholders in August 2012, at which point a further announcement will be made.

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Enquiries

Analysts and investors

Owen Michaelson                           Managing Director, Harworth Estates                     Tel: [phone]

David Brocksom                               Group Finance Director, UK Coal                               Tel: [phone]

Media

Alexandra Stoneham /

Emma Crawshaw                             Cardew Group                                                                   Tel: [phone]

Andrew Mackintosh                       Director of Communications, UK Coal                    Tel: [phone]

Notes to Editors

UK COAL is a mining, property and power company employing c.2,500 people with its headquarters at Harworth Park, Harworth, near Doncaster, South Yorkshire.

Britain's biggest producer of coal, UK COAL operates three deep mines in the Midlands and Yorkshire, and surface mines in the North East, the North West and the Midlands.  Over 90% of the total annual output is sold to generate around 5% of Britain's electricity requirements.

The Group owns around 30,000 acres of land and other property. Harworth Estates, the property arm of the business, currently has plans to develop 85 sites covering a developable area of more than 4,000 acres, creating opportunities for building around 30,000 homes and 32 million square feet of business space over the next decade.

For more information, please go to:  www.ukcoal.com

 

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