Posting of Harworth Power Disposal Circular

RNS Number : 3228M

UK Coal PLC

14 September 2012

 



14 September 2012

UK Coal PLC

Posting of Harworth Power Disposal Circular

The Board of UK Coal plc ("UK Coal") announces that a circular relating to the proposed disposal of Harworth Power (Generation) Limited (the "Circular"), has been approved by the UK Listing Authority and is being posted today to Shareholders.

The Circular contains a notice convening a General Meeting of Shareholders to be held at the offices of Investec Bank PLC, 2 Gresham Street, London EC2V 7QP at 1.00 p.m. on 1 October 2012, at which approval for the Disposal will be sought.

The Circular will be made available for inspection at the offices of the Company at Harworth Park, Blyth Road, Harworth, Doncaster, DN11 8DB and at the offices of Pinsent Masons LLP, 30 Crown Place, London, EC2A 4ES during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) up to and including the date of the General Meeting. The Circular will also shortly be made available for viewing on the Company's website at www.ukcoal.com and has been submitted to the National Storage Mechanism, where it will be available for inspection at www.hemscott.com/nsm.do.

Investec Bank PLC acted as Sponsor to UK Coal.

The terms of the Disposal Agreement, in all material respects, remain as notified by the Company on 22 June 2012.

-      END    -

Enquiries

Analysts and investors

Jonson Cox                                           Chairman, UK Coal                                            Tel: [phone]

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

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

Media

Anthony Cardew / Emma Crawshaw        Cardew Group                                        Tel: [phone]

Investec, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as sponsor exclusively for UK Coal connection with the Disposal. Investec is not acting for, and will not be responsible to, any person other than UK Coal for providing protections afforded to customers of Investec or for advising any other person on the contents of the Circular or any transaction or arrangement referred to herein. For the avoidance of doubt, nothing in this paragraph seeks to limit or exclude Investec's responsibilities and liabilities which may arise under FSMA or the regulatory regime established thereunder.

Climate Change Capital Limited, which is authorised and regulated by the Financial Services Authority, is acting for UK Coal and for no one else in connection with the Disposal and will not be responsible to anyone other than UK Coal for providing the protections afforded to customers of Climate Change Capital Limited or for affording advice in relation to the Disposal.

Forward looking statements

This announcement contains certain "forward-looking statements" with respect to the financial condition, results of operations and business of the Company, the Group and the Continuing Group and certain plans and objectives of the members of the Group. In some cases, these forward-looking statements can be identified by the fact that they do not relate to historical or current facts and by the use of forward-looking terminology, including the terms "anticipates", "believes", "estimates", "expects", "intends", "plans", "prepares", "goal", "target", "will", "may", "should", "could" or "would" or, in each case, their negative or other variations or comparable terminology. These statements are based on assumptions and assessments made by the Directors in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. Investors should specifically consider the factors identified in this announcement that could cause actual results to differ before making an investment decision. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, the Group or the Continuing Group, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. They are also based on numerous assumptions regarding the Company's, the Group's and/or the Continuing Group's present and future business strategies and the environment in which it is believed that the Continuing Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. Except as required by the FSA, the Listing Rules, the Disclosure and Transparency Rules, the London Stock Exchange or applicable law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this announcement.

APPENDIX I

letter from the chairman of UK Coal plc

UK COAL PLC

 (Incorporated and registered in England and Wales under the Companies Act 1985 with registered number 2649340)                               

14 September 2012

Dear Shareholder,

Proposed Disposal of Harworth Power (Generation) Limited ("HP(G)")

1.            Introduction and summary of proposed disposal

The Company announced on 22 June 2012 that the Seller, a wholly-owned subsidiary of UK Coal, had entered into a conditional agreement with Red Rose Infrastructure Limited to sell the entire issued share capital of HP(G) for an aggregate maximum consideration of £20.3 million, of which £20.0 million is payable by the Buyer in cash on Completion. Payment of the remaining £0.3 million of the consideration is dependent upon future rights to gas extraction being granted to HP(G) by DECC.

The Disposal forms part of the Company's plan to manage its liabilities, improve operational and financial performance and strengthen its balance sheet, in part through an asset realisation programme. £7.4 million of the net proceeds of the Disposal will be used to reduce the borrowings and net liabilities of the Group and £11.3 million will be held by the Seller pending completion of the proposed restructuring of the Group's business referred to further in Paragraph 10 of Part I of the Circular.

The Disposal is of sufficient size relative to the size of the Company to constitute a Class 1 transaction for the purposes of the Listing Rules.  As a result, and as required by the Listing Rules, the Disposal is conditional upon the approval of Shareholders.   

Your approval of the Disposal is being sought at a general meeting of the Company to be held at 1.00 p.m. on 1 October 2012 at the offices of Investec Bank PLC, 2 Gresham Street, London EC2V 7QP.  A notice convening the general meeting containing the full text of the Resolution to be considered at the meeting is set out at the end of the Circular.  A summary of the action you should take is set out in paragraph 11 of this letter and on the Form of Proxy that accompanies the Circular.  If the Resolution is passed at the General Meeting on 1 October 2012, Completion is expected to take place on the same date.

Shareholders should note the working capital statement set out in Paragraph 12 of Part 1 of the Circular which states that the Company is of the opinion that the Continuing Group does not have sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of the Circular.

The purpose of the Circular is to provide you with information on the Disposal, to explain the background to and reasons for the Disposal and why the Board believes the Disposal is in the best interests of UK Coal's shareholders taken as a whole and to recommend that you vote in favour of the Resolution. 

The financial information in Part I of the Circular has been extracted without material adjustment from the financial information contained in Part III (Financial Information on HP(G)) of the Circular.

You will find definitions for capitalised terms used in this letter in Part VIII (Definitions) of the Circular.

2.       Information on HP(G)

HP(G) is one of the UK's leading coal mine methane power generators, with assets at UK Coal's Kellingley, Thoresby, Harworth and Stillingfleet mines.  HP(G) has installed and operates fourteen gas engines across its asset portfolio, which currently have a maximum electricity generating capacity of 26MW. The electricity generated is either used at UK Coal sites or is supplied to the relevant regional electricity distribution network.

In the year ended 31 December 2011, HP(G) reported an operating profit deriving from its assets and business of £2.5 million (2010: £2.3 million) on revenues of £5.5 million (2010: £3.7 million). A summary of the unaudited trading results for the assets and business of HP(G) for the three years ended 26 December 2009, 25 December 2010 and 31 December 2011 and the  six months ended 30 June 2012 (on an IFRS basis) is set out below.

£ million	Unaudited Six Months ended 30 June 2012	Unaudited Year ended 31 December 2011	Unaudited Year ended 25 December 2010	Unaudited Year ended 26 December 2009
Revenue	2.6	5.5	3.7	5.1
Operating Profit	1.2	2.5	2.3	2.6
Profit Before Tax	1.2	2.4	2.2	2.2

The gross assets of HP(G) were £5.3 million at 31 December 2011 and £6.0 million at 30 June 2012.

Shareholders should read the whole of the Circular and not just rely on the summarised financial information set out in Part I. Please refer to Part III (Financial Information on HP(G)) of the Circular for further historic financial information relating to HP(G).

3.       Information on Red Rose Infrastructure Limited

Red Rose Infrastructure Limited is managed by Capital Dynamics Clean Energy and Infrastructure, a clean energy asset manager. Capital Dynamics Clean Energy and Infrastructure is part of the Capital Dynamics Group, which is an independent asset management firm focusing on investing in the clean energy, infrastructure and property sectors. On 18 January 2012, the Capital Dynamics Group announced the acquisition of a 64MW portfolio of landfill gas assets in the UK, which has comparable operational characteristics to the business of HP(G). This transaction was also negotiated and completed by the Capital Dynamics Clean Energy and Infrastructure team. 

4.       Background to and reasons for the Disposal

The Disposal forms part of the Company's strategy to improve the Continuing Group's operational and financial performance, reduce net debt and strengthen its balance sheet, in part through an asset realisation programme. A portion of the net proceeds of the Disposal will therefore be used to reduce borrowings. The Disposal is not expected to prevent a breach of covenants in the Company's Bank Facilities at the 31 December 2012 measurement date causing the Company to breach the terms of its Bank Facilities, which would, in the event that a waiver of these covenants cannot be obtained, result in the Bank Facilities becoming repayable in the first quarter of 2013. It would however, in the Board's view be expected to delay a financing shortfall under its Bank Facilities from earlier in the first quarter of 2013 to later in the first quarter of 2013. This would provide additional time for the Company to undertake its negotiations on the proposed restructuring (described in Paragraph 10 of Part I of the Circular). In light of the working capital position of the Company (described in Paragraph 12 of Part I of the Circular), the Company is working towards concluding the proposed restructuring as soon as possible.

The Board believes the Disposal is consistent with UK Coal's requirement to strengthen its working capital position and that the consideration for the Disposal fairly reflects the prospects of HP(G) and represents a fair market consideration in the context of the prevailing market conditions.

5.       Use of proceeds and financial effects of the Disposal on the Group

At Completion, the net cash proceeds arising from the Disposal are expected to be approximately £18.7 million, after estimated transaction costs of £1.3 million. 

It is intended that £7.4 million of the net proceeds of the Disposal will be used to reduce the borrowings and net liabilities of the Group by reducing drawings on the RCF Facility, reducing net bank debt and finance leases from £66.0 million as at 30 June 2012 to £58.6 million. The balance of the proceeds of £11.3 million will be held by the Seller pending completion of the proposed restructuring.

Under certain circumstances set out below the £11.3 million to be held by the Seller pending completion of the proposed restructuring may be used to fund additional pension deficit contributions payable by the Company.  In the event that the market value of the assets of the Pension Funds or the Blenkinsopp Section declines or the value of the assessed liabilities in respect thereof increases, or if the Pension Trustees determine that the Group's financial position requires a different approach to contributions and deficit reduction, the Group may be required to increase its deficit contributions. Changes in the investment strategy of the Pension Funds or the Blenkinsopp Section may also result in a requirement to increase the Group's contributions. In addition, the Pensions Regulator has powers, the exercise of which could require the Group to make additional contributions. Any proposed increase in deficit contributions would be subject to a revised deficit valuation, which would be expected to take 12-15 months to complete. Therefore in the event that the proposed restructuring (described in Paragraph 10 of Part I of the Circular), which is subject to further negotiation and agreement of legally binding documentation, does not proceed and if any of the circumstances above apply, it is expected that the £11.3 million of the Disposal proceeds that are not used to reduce drawings on the RCF Facility may be applied to fund additional pension deficit contributions payable by the Company. The proposed restructuring is not conditional on the Disposal however negotiations for the proposed restructuring agreement have taken into account the assumed Disposal proceeds.

In the event the Disposal does not proceed as a consequence of the Resolution not being passed and for no other reason then the Seller has agreed to reimburse to the Buyer an amount equal to the reasonable external costs and expenses incurred by the Buyer on or after 14 May 2012 regarding the preparation and execution of the Disposal Agreement up to a maximum of £250,000 (plus any value added tax charged on such costs and expenses). The Disposal Agreement also contains certain warranties and indemnities given by the Seller in favour of the Buyer in respect of HP(G).  The warranties are subject to limitations (as set out in Paragraph 4 of Part VI (Principal Terms of the Disposal Agreement) of the Circular) and liability of the Seller thereunder is capped at £10.0 million, subject to certain exceptions. 

The unaudited pro forma financial information for the Continuing Group illustrates the effect of the Disposal on the Group's net assets as at 30 June 2012 as if the Disposal had taken place at that date and is set out in Part IV of the Circular.  This information has been prepared for illustrative purposes only. 

The estimated net debt figures set out in Part I of the Circular have been sourced from the unaudited pro forma financial information set out in Part IV (Unaudited Pro Forma Financial Information) of the Circular.

Had the Disposal occurred on 1 January 2012, the commencement of the current financial year of the Group, earnings for the Group would have been reduced. The Disposal would have increased the Group's net assets by £12.7 million had it occurred on 30 June 2012, as shown in the unaudited pro forma financial information for the Continuing Group set out in Part IV of the Circular.

In 2011 when the Group owned 100% of HP(G) it received revenues of £2,745,000 at Stillingfleet, £566,000 at Harworth, £332,000 at Thorseby and £1,739,000 at Kellingley, representing the total revenue from each site. Following the Disposal the Group will receive a reduced share of the royalties from HP(G). It will receive 20% of all future revenues generated from the sites at Kellingley, Thoresby and Harworth and will receive 10% of all future revenues generated from Stillingfleet. Future royalties will vary in line with methane extraction, which determines the revenues on which royalties are based.

6.       Current Trading and Prospects of the Continuing Group

Group revenues fell 23% in the first half of 2012 to £198.3 million (H1 2011: £256.1 million, FY 2011: £488.2 million) following significantly lower sales volumes at slightly higher average realised sales prices (H1 2012 £2.43/GJ: H1 2011 £2.36/GJ, FY 2011: £2.48/GJ).  This led to an operating loss of £6.0 million before non-trading exceptional items in the first half of 2012, £41.2 million worse than the operating profit before non-trading exceptional items of £35.2 million booked in H1 2011.

Exceptional costs totalling £5.7 million have been incurred in the period (H1 2011: £0.1 million credit, FY 2011: £16.1 million credit).  These costs relate to refinancing and restructuring activities carried out in the first half of 2012.  Professional fees of £3.5 million have been classified as non-trading exceptional items and refinancing costs of £2.2 million have been classified as exceptional finance costs.

The Group has continued its programme of realising value from its brownfield property portfolio and achieved disposals in the first half of 2012 with net book value of £16.3 million. These sales generated a profit on disposal of £0.4 million (H1 2011: £2.1 million, FY 2011: £2.7 million).  The net proceeds of disposals received in the first half of 2012 of £11.4 million (H1 2011: £36.0 million, FY 2011: £64.3 million), including £3.5 million received in relation to property exchanges in 2011, have been used to reduce the Group's debt.

The Group made a loss before tax of £20.6 million in the period (H1 2011: £22.1 million profit, FY 2011: £58.0 million profit), reflecting the operating loss before exceptional items of £6.0 million, net interest costs of £8.9 million and exceptional costs relating to the refinancing and the restructuring of £5.7 million. As at 30 June 2012 net bank debt, excluding restricted funds was £66.1 million (H1 2011: £109.8 million, FY 2011 £54.7 million) and Generator loans and prepayments were £72.2 million (H1 2011: £97.5 million, FY 2011: £84.1 million).

The Group continues to experience operational difficulties, in particular at its Daw Mill deep mine. Following the recovery of Daw Mill's 32s panel, the mine has been able to recommence mining operations on this panel although at lower than expected production levels. The difficult geological conditions experienced on both the 32s and the 303s panels, coupled with the difficulty of operating two coal faces in this mine, have led the Board to decide that the safest option is to concentrate current mining operations on the 303s panel, which will also mitigate the loss of production. The 32s panel will be put into safe salvage as soon as practicable. This will enable more consistent production in 2012 but is likely to add four weeks to an expected interruption to production in 2013 between the end of operations at the 303 and the start of operations at the 33s panel.

7.       Risk Factors

For a discussion of the risks and uncertainties which you should take into account when considering whether to vote in favour of the Resolution, please refer to Part II (Risk Factors) of the Circular.

8.       General Meeting

A notice convening the General Meeting to be held at 1.00 p.m. on 1 October 2012 at the offices of Investec Bank PLC, 2 Gresham Street, London EC2V 7QP is set out at the end of the Circular. A Form of Proxy to be used in connection with the General Meeting is enclosed with the Circular.

Owing to the size of the Disposal relative to the size of the Company, the Company requires the approval of Shareholders to proceed with the Disposal.  The completion of the Disposal is, therefore, conditional on the passing of the Resolution at the General Meeting.  The full text of the Resolution, which is to be proposed as an ordinary resolution at the General Meeting, is set out in the Notice of General Meeting at the end of the Circular.

The passing of the Resolution requires a majority of the votes cast in respect of the Resolution to be in favour of the resolution.

9.       Further information

Your attention is drawn to the further information set out in Part II to Part VII of the Circular. You should read the whole of the Circular and, in particular, the risks and uncertainties set out in II (Risk Factors).

10.     Proposed Restructuring

As announced in the Company's interim results on 10 August 2012, the Company has made significant progress towards agreeing a proposed restructuring of its businesses. The proposed restructuring is a highly complex process that involves the goodwill and understanding of a range of stakeholders including the Pension Funds, the Pensions Regulator, the Company's principal banking partner Lloyds Banking Group, Barclays Bank, customers, DECC and the Coal Authority.

A non-binding heads of terms agreement has been reached with the Pension Trustees, and agreement in principle with the Generators, which would result in a combined c.£90 million of financial support to UK Coal over the period to the end of 2015 once the proposed restructuring is implemented.  Under the proposed plan it is intended that the mining business would be left free of bank debt and would have an affordable pension deficit reduction scheme.   This is expected to create a more stable platform more likely to release the value in the mining business.  As part of this arrangement, from 2014 the Pension Funds would receive £30.0 million per annum in deficit contributions plus any cash in the mining business above a minimum headroom requirement of £50.0 million, after agreeing to defer any deficit contributions in 2012 and 2013.

As part of the proposed plan to address the pension fund deficit, it is intended that the Pension Trustees would also invest £30 million in the property business to enable the release of the latent undeveloped value in the property portfolio.  In exchange, the Pension Trustees would receive a direct stake of 75.1% in that business, with existing shareholders being entitled to the benefit of the remaining 24.9%.  This stake would be held through a new holding company which would not guarantee the pension liability.  In return for the stake, the first £5 million of shareholders' dividend income would be paid to the Pension Funds.  The terms of the proposed restructuring would mean that Shareholders' principal continuing economic interest in the Group would be a minority stake in the long term development potential of its property assets. 

The Company has had constructive discussions in relation to the heads of terms with the Pension Regulator, who has not raised any major objections to the proposals.  The observations which have been raised by the Pension Regulator appear capable of resolution.  The proposed restructuring has also been explored with the Company's major stakeholders and the Board has concluded that it offers UK Coal a viable, and sustainable, future. It remains subject to further negotiation and agreement of legally binding documentation with stakeholders and approval of Shareholders. The proposed restructuring is not conditional on the Disposal, however negotiations for the proposed restructuring agreement have taken into account the assumed Disposal proceeds.

11.     Action to be taken

You will find enclosed with the Circular a Form of Proxy for use in connection with the General Meeting or at any adjournment thereof.

It is important to us that our Shareholders have the opportunity to vote, even if they are unable to come to the General Meeting. If you are unable to come to the General Meeting you can use the enclosed Form of Proxy to nominate someone else to come to the meeting and vote for you (this person is called a proxy). In the event the Disposal does not proceed it is unlikely the Company would be able to complete the proposed restructuring.

To appoint a proxy you need to send back the Form of Proxy.  As an alternative to returning the Form of Proxy, you can appoint a proxy electronically.  Details of the procedure are set out in the notes to the Form of Proxy and the notes to the Notice of General Meeting at the end of the Circular.

You are requested to complete and sign the Form of Proxy whether or not you propose to attend the General Meeting in person in accordance with the instructions printed on it and return it as soon as possible, but in any event so as to be received no later than 1.00 p.m. on 29 September 2012, by Equiniti, the Company's Registrar, at Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA.

If you hold your Ordinary Shares in uncertificated form (ie in CREST) you may appoint a proxy by completing and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by Equinti (under CREST participant ID RA19), by no later than 1.00p.m. on 29 September 2012.

Unless the Form of Proxy or CREST Proxy Instruction is received by the relevant date and time specified above, it will be invalid.

Completion and posting of the Form of Proxy or completing and transmitting a CREST Proxy Instruction will not preclude you from attending and voting in person at the General Meeting if you wish to do so.

12.          Working Capital

The Company is of the opinion that the Continuing Group does not have sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of the Circular.

If the Resolution is passed and the sale of HP(G) completes, the net proceeds of the Disposal together with the Company's existing Bank Facilities and existing cash balances will not address the Company's medium and longer term working capital requirements.  It is for this reason that the Company is in the process of negotiating a proposed restructuring with its stakeholders.

Absent the completion of the proposed restructuring, which is subject to further negotiation and agreement of legally binding documentation, and after taking account of the net proceeds of the Disposal, the Company's current expectation is that it will breach the covenants of its Bank Facilities at the 31 December 2012 measurement date causing the Company to breach the terms of its Bank Facilities 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. In the event of a covenant breach, the Company would need to obtain a waiver of the relevant covenant from its banks to avoid the Bank Facilities becoming repayable, which in the absence of the proposed restructuring, the Directors are not confident that they would be able to obtain. In addition to the covenant breach, the amount of financing available under the existing Bank Facilities is insufficient to meet forecast working capital requirements during the first quarter of 2013 with an expected funding shortfall of approximately £15 million during this quarter, after taking the Disposal proceeds into account. In the event the Company defaults on its Bank Facilities it will no longer be able to trade as a going concern which would be likely to result in the appointment of receivers, liquidators or administrators as early as the first quarter of 2013.

In the event the Disposal does not proceed, it is the Company's current expectation that there will be a financing shortfall under the existing Bank Facilities of approximately £20 million in the first quarter of 2013, occurring earlier in the quarter than would be the case were the Disposal to proceed, and the expectation remains that the Company will breach the covenants referred to in the preceding paragraph at the 31 December 2012 measurement date. In the event the Company defaults on its Bank Facilities it will no longer be able to trade as a going concern which would be likely to result in the appointment of receivers, liquidators or administrators as early as the first quarter of 2013.

There are a variety of factors which could result in a further deterioration in the Company's working capital position and lead to an earlier and / or greater financing shortfall. These operational issues include a fall in coal market prices and production stoppages, such as increases in face gaps.

As a result of the financing pressures and the operational risks faced by the Company and the need to secure further support from key stakeholders, including the Pension Funds (as noted in Paragraph 10 above concerning the proposed restructuring), the Directors believe that the Continuing Group will require restructuring in order for it to continue to trade as a going concern for the foreseeable future. The Directors believe that there is a reasonable prospect of implementing the proposed restructuring and securing the Company's financial position by the end of 2012. However, it is a complex process and, as set out above, will require the approval of a number of parties and formal legal and regulatory clearance. The Board is confident that if the restructuring is successfully completed the Continuing Group will have adequate resources to continue in operational existence for the foreseeable future.

The proposed restructuring remains subject to further negotiation and agreement of legally binding documentation with stakeholders.

13.     Recommendation

The Board considers the terms of the proposed Disposal to be in the best interests of shareholders as a whole.

Accordingly, the Board unanimously recommends Shareholders vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings, which amount in aggregate to 875,404 Ordinary Shares and represent approximately 0.29 per cent. of UK Coal's issued share capital as at 13 September 2012 (the latest practicable date prior to publication of the Circular).

Yours faithfully

Jonson Cox
Chairman
14 September 2012

definitions

The following terms have the following meanings throughout this announcement and the Circular unless the context otherwise requires:-

"Bank Facilities"	the bank facilities set out in Paragraph 7.1 (d) of Part VII of the Circular
"Blenkinsopp Section"	the Blenkinsopp section of the Industry-Wide Mineworkers' Pension Scheme
"Board" or "Directors"	together the Executive Directors and the Non-Executive Directors
"Buyer"	Red Rose Infrastructure Limited (registered number 7686173), whose registered address is at 1030 Central Park, Slutchers Lane, Warrington WA1 1QL
"Circular" or "this document"	this circular issued by the Company and dated 14 September 2012
"Completion"	the completion of the Disposal in accordance with the terms of the Disposal Agreement
"Continuing Group"	UK Coal and its subsidiaries and subsidiary undertakings, excluding HP(G)
"CREST"	the relevant system (as defined in the CREST Regulations) for the paperless settlement of trades in listed securities in the United Kingdom, of which Euroclear is the operator (as defined in the CREST Regulations)
"CREST Manual"	the manual, as amended from time to time, produced by Euroclear describing the CREST system and supplied by Euroclear to users and participants thereof
"CREST Proxy Instruction"	the instruction whereby CREST members send a CREST message appointing a proxy for the meeting and instructing the proxy on how to vote
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001/3755)
"DECC"	the Department for Energy and Climate Change
"Disposal"	the proposed sale by the Seller of the entire issued share capital of HP(G) to the Buyer pursuant to the Disposal Agreement
"Disposal Agreement"	the share sale and purchase agreement dated 22 June 2012 between the Seller and the Buyer in relation to the Disposal, pursuant to which the Seller has conditionally agreed to sell the entire issued share capital of HP(G) to the Buyer, and which is described in more detail in Part VI (Principal Terms of the Disposal Agreement) of the Circular
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST
"Executive Directors"	the executive directors of the Company at the date of this Circular, being Jonson Cox, Gareth Williams, Owen Michaelson and David Brocksom
"Form of Proxy"	the form of proxy accompanying the Circular for use by Shareholders in connection with the General Meeting
"FSA"	the Financial Services Authority of the United Kingdom
"FSMA"	the Financial Services and Markets Act 2000, as amended
"FTSE"	Financial Times Stock Exchange
"General Meeting"	the General Meeting of the Company convened by the Notice of General Meeting to be held at 1.00 p.m. on 1 October 2012 at the offices of  Investec Bank PLC, 2 Gresham Street, London EC2V 7QP  or any reconvened meeting following any adjournment thereof
"Generators"	the generator customers of the Group, being E.ON Energy Trading, Scottish and Southern Energy, Edf Energy and Drax Power Ltd.
"Group"	in respect of any time prior to Completion, UK Coal and its subsidiaries and subsidiary undertakings including HP(G) and, in respect of periods any time following Completion, the Continuing Group
"HP(G)"	Harworth Power (Generation) Limited (registered number 7896679) whose registered office is Harworth Park, Blyth Road, Harworth, Doncaster, DN11 8DB
"IFRS"	International Financial Reporting Standards as adopted by the Council of the European Union
"Listing Rules"	the Listing Rules made by the FSA pursuant to FSMA governing, inter alia, admission of securities to the Official List
"London Stock Exchange"	London Stock Exchange plc
"MW"	Megawatt (one million Watts)
"Non-Executive Directors"	the non-executive directors of the Company at the date of this Circular, being Peter Hickson, Keith Heller, Steven Underwood and Lisa Clement
"Notice of General Meeting"	the notice of the General Meeting set out at the end of the Circular
"Official List"	the Official List of the Financial Services Authority
"Ordinary Shares"	ordinary shares of 1 pence each in the capital of the Company
"Pension Funds"	the UK Coal Mining Limited section of each of the Industry-Wide Coal Staff Superannuation Scheme and the Industry-Wide Mineworkers' Pension Scheme
"Pension Protection Fund"	a body corporate established under the Pensions Act 2004
"Pensions Regulator	the regulatory body established by the Pensions Act 2004
"Pension Trustees"	the Industry-Wide Coal Staff Superannuation Scheme Trustees Limited, as the trustee of the Industry-Wide Coal Staff Superannuation Scheme, and the Industry-Wide Mineworkers' Pension Scheme Trustees Limited, as the trustee of the Industry-Wide Mineworkers' Pension Scheme
"RCF Facility"	the Revolving Credit Facility described in paragraph 7.1(d) of Part VII (Additional Information) of the Circular
"Registrar" or "Equiniti"	Equiniti Limited, Aspect House, Spencer Road, Lancing West Sussex, BN99 6DA
"Resolution"	the ordinary resolution as set out in the Notice of General Meeting
"Seller"	Harworth Power Limited (registered number 1156905), a wholly-owned subsidiary of UK Coal, whose registered office is at Harworth park, Blyth Road, Haworth, Doncaster DN11 8DB
"Shareholders"	holders of Ordinary Shares
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"UK Coal" or "Company"	UK Coal plc (registered number 2649340) whose registered office is at Harworth Park, Blyth Road, Haworth, Doncaster DN11 8DB
"UK Coal Mining"	UK Coal Mining Limited (no. 02997374) whose registered office is Harworth Park, Blyth Road, Haworth, Doncaster, DN11 8DB, a subsidiary of UK Coal
"uncertificated" or "in uncertificated form"	recorded on the Company's register of members as being as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST
"£" or "Sterling" or "£" or "pence"	the lawful currency of the United Kingdom

 

END

 

 

MSCLLFSFARISLIF