Rights Issue Announcement

RNS Number : 1123L

Coalfield Resources PLC

07 August 2013

 



THIS ANNOUNCEMENT, INCLUDING THE APPENDICES (TOGETHER, THE 'ANNOUNCEMENT'), IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN AND THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION TO BE CONTAINED IN THE PROSPECTUS COMPRISING A CIRCULAR EXPECTED TO BE PUBLISHED BY THE COMPANY TODAY IN CONNECTION WITH THE PROPOSED RIGHTS ISSUE (THE "PROSPECTUS"). COPIES OF THE PROSPECTUS WILL BE AVAILABLE FROM THE COMPANY'S REGISTERED OFFICE AND WILL BE AVAILABLE FOR INSPECTION BY THE PUBLIC DURING NORMAL BUSINESS HOURS ON ANY DAY (EXCEPT SATURDAYS, SUNDAYS AND PUBLIC HOLIDAYS) AT THE FINANCIAL CONDUCT AUTHORITY'S DOCUMENT VIEWING FACILITY.

7 August 2013

Coalfield Resources Plc

("Coalfield Resources" or the "Company")

Coalfield Resources announces rights issue to raise net proceeds of approximately £5.0 million

Coalfield Resources announces that it intends to raise approximately £5.0 million net proceeds (£6.0 million gross proceeds) through a rights issue ("Rights Issue"). As announced on 31 May 2013 and 9 July 2013, the net proceeds of the Rights Issue will be used to repay the Company's facility with Lloyds ("Facility") and any surplus will provide additional working capital for the Company. The Rights Issue is being fully underwritten by Peel Holdings Limited ("Peel") or a member of the Peel Group, the Company's largest Shareholder. The Rights Issue is subject to the approval of shareholders at the General Meeting to be held on 27 August 2013.

Key highlights

·      1 for 1 rights issue

·      Raising net proceeds of approximately £5.0 million at an issue price of 2 pence per New Ordinary Share

·      Issue Price represents a 36.00 per cent. discount to the theoretical ex-Rights price based on the closing middle-market price of 4.25 pence per Ordinary Share as of 6 August 2013

·      Issue Price represents a 52.94 per cent. discount to the closing middle-market price on 6 August 2013, the last business day prior to the date of announcement of the Rights Issue

·      Fully underwritten by Peel, or a member of the Peel Group, the Company's largest Shareholder

·      Conditional upon Shareholder approval of the Resolutions at the General Meeting

Jonson Cox, Chairman of Coalfield Resources Plc said "This fully underwritten Rights Issue is a significant step in the process of enabling Coalfield Resources Plc to play its part as an active investor in realising the value inherent in the properties of the former coalfields, and will give us the funding flexibility to do so."

He added "the Board continues to be confident of the longer-term potential of Coalfield Resources. Last December's successful restructuring of the former UK Coal preserved a share of the property interests for our shareholders alongside interests granted to the Pension Funds and the release of obligations for the pension deficit. The subsequent difficulties of the mining business have made it necessary, and in the best interests of all shareholders, to raise equity now so that the Company can continue to realise and enhance long term value."

The full details of the Rights Issue and the Resolutions can be found in the Prospectus containing a notice of General Meeting, which together with a Form of Proxy will be sent to all shareholders both in the UK and overseas (irrespective of whether or not the shareholders can participate in the Rights Issue) as required by Rule 9 of the Takeover Code. The Prospectus will also be placed on the Company's website at www.coalfieldresources.com later today and available via the National Storage Mechanism (www.morningstar.co.uk/nsm). Copies of the Prospectus are also available at the Company's registered address, Harworth Park, Blyth Road, Harworth, Doncaster, South Yorkshire, DN11 8DB.

Investor and analyst presentation

Coalfield Resources will hold a meeting for analysts and investors at 9.30 a.m. (UK time) on 27 August 2013 to respond to queries immediately prior to the General Meeting.

The meeting will take place at Eversheds LLP, One Wood Street, London, EC2V 7WS. Dial in details will be advised closer to the time.

Enquiries

Coalfield Resources

Jonson Cox, Chairman 01302 755 100

Jeremy Hague, Finance Director 01302 755 100

Investec Bank Plc (Financial Adviser and Broker): 020 7597 4000

Jeremy Ellis / Chris Sim / David Anderson

Cardew Group (Media): 020 7930 0777

Anthony Cardew / Tom Horsman

Expected timetable of principal events

Each of the times and dates in the table below is indicative only and may be subject to change.

Record Date for entitlement under the Rights Issue	Close of business on 22 August 2013
Latest time and date for receipt of forms of proxy	10:00 a.m. on 25 August 2013
General Meeting	10:00 a.m. on 27 August 2013
Admission and commencement of dealings in Nil Paid Rights and Fully Paid Rights on the London Stock Exchange	8:00 a.m. on 28 August 2013
Existing Ordinary Shares marked "ex" by the London Stock Exchange	8:00 a.m. on 28 August 2013
Latest time and date for acceptance, payment in full and registration or renunciation of Provisional Allotment Letters	11:00 a.m. on 11 September 2013
Admission and commencement of dealings in New Ordinary Shares, fully paid, on the London Stock Exchange	8:00 a.m. on 12 September 2013

 Notes on expected timetable of principal events:

a)     Subject to certain restrictions relating to Qualifying Shareholders with registered addresses outside the UK, details of which are set out in Part III of the Prospectus.

b)    References to times in this document are to London time unless otherwise stated.

c)     The times and dates set out in the expected timetable are indicative only and may be adjusted by Coalfield Resources in consultation with the Underwriter in which event details of the new times and dates will be notified to the FCA, London Stock Exchange and, where appropriate, Qualifying Shareholders.

d)    If you have any queries on the procedure for acceptance and payment, you should contact Equiniti at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA on 0871 384 2833 or from outside the UK on [phone].  The Shareholder Helpline is available from 8.30 a.m. to 5.30 p.m. (London time) Monday to Friday, excluding bank holidays. 

Calls to the Shareholder Helpline number are charged at approximately 8 pence per minute (excluding VAT) plus network extras. Calls to the Shareholder Helpline number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes.

Please note that Equiniti cannot provide financial advice on the Rights Issue or as to whether or not you should take up your rights under the Rights Issue.

Copies of the Prospectus will be available for inspection during normal business hours on any weekday (Saturday, Sundays and public holidays excepted) at the offices of Eversheds LLP at One Wood Street, London, EC2V 7WS, up to and including 27 August 2013.

This announcement has been issued by, and is the sole responsibility of, Coalfield Resources Plc.

Important Information

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of information in the Prospectus which is expected to be published by the Company today in connection with the Rights Issue. Copies of the Prospectus will, following publication, be available from the Company's registered office. This announcement does not constitute, or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any Provisional Allotment Letter, Nil Paid Rights, Fully Paid Rights and/or New Ordinary Shares should only be made on the basis of information contained in and incorporated by reference into the Prospectus which contains further details relating to the Company in general as well as a summary of the risk factors to which an investment in the New Ordinary Shares is subject. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue.

Subject to certain exceptions, the Shareholders located in the Excluded Territories will not be able to participate in the Rights Issue. This announcement is not directed to, or intended for distribution or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability, or use would be contrary to law or regulation which would require any registration or licensing within such jurisdiction.

This announcement and the information contained herein is not an offer of securities for sale in the United States. The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters may not be offered or sold in the United States or to or for the account or benefit of a person located in the United States absent registration under the US Securities Act of 1933, as amended (the "Securities Act") or an exemption from, or in a transaction not subject to, registration requirements of the Securities Act. The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been and will not be registered under the Securities Act, or with any securities regulatory authority of any state or jurisdiction of the United States and no public offering of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares or the Provisional Allotment Letters will be made in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this announcement, will not be accepted.

This announcement does not constitute an offer of Nil Paid Rights, Fully Paid Rights, New Ordinary Shares or Provisional Allotment Letters to any person with a registered address in, or who is resident in any of the Excluded Territories. None of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares or the Provisional Allotment Letters has been or will be registered under the relevant laws of any state, province or territory of Australia, Canada, Japan or South Africa. Subject to certain limited exceptions, neither the Prospectus, the Provisional Allotment Letter nor this announcement will be distributed in or into any of the Excluded Territories.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.

Investec Bank Plc ("Investec"), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority is acting as financial adviser and broker in respect of the Rights Issue. Investec is acting exclusively for the Company and for no one else in connection with the Rights Issue and will not regard any person (whether or not a recipient of this announcement or the Prospectus) as a client in relation to the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Investec or for providing advice in relation to the Rights Issue, the contents of this announcement and the accompanying documents or any matters or arrangements referred to herein or therein.

This announcement should not be considered a recommendation by Investec or any of its directors, officers, employees, advisers or any of its affiliates in relation to any purchase of or subscription for securities.  Neither Investec nor its directors, officers, employees, advisers or any of its affiliates accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy, fairness, sufficiency or completeness of the information or the opinions or the beliefs contained in this announcement (or any part hereof). None of the information contained in this announcement has been independently verified or approved by Investec or any of its directors, officers, employees, advisers or any of its affiliates. Save in the case of fraud, no liability is accepted by Investec or any of its directors, officers, employees, advisers or any of its affiliates for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement. No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company or Investec. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this announcement or that the information in it is correct as at any subsequent date.

The statements contained in this announcement that are not historical facts are "forward-looking" statements. These forward-looking statements are subject to a number of substantial risks and uncertainties, many of which are beyond the Company's control and actual results and developments may differ materially from those expressed or implied by these statements for a variety of factors. These forward-looking statements are statements based on the Company's current intentions, beliefs and expectations about among other things, the Company's results of operations, financial condition, prospects, growth, strategies and the industry in which the Company operates. Forward-looking statements are typically identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "assumes" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the Prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. In addition, from time to time, the Company or its representatives have made or may make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of an authorised executive officer of the Company. No assurance can be given that such future results will be achieved; actual events or results may differ materially from those expressed in or implied by these statements as a result of risks and uncertainties facing the Company and its subsidiaries. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as changes in taxation and fiscal policy, future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. The forward-looking statements contained in this announcement speak only as of the date of this announcement and the Company undertakes no duty to update any of them publicly in light of new information or future events, except to the extent required by applicable law, the Prospectus Rules, the Listing Rules and the Disclosure and Transparency Rules.

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

1.     Background to and reasons for the Rights Issue

Following the Restructuring in December 2012, the Group's principal active investment is in the property development and investment company HEPGL (which is the parent company of the Harworth Estates Group), in which it has a 24.9 per cent. stake with a book value at 29 December 2012 of £50.3 million. The Directors believe that no material change has occurred to the value of the Company's investment in HEPGL since 29 December 2012, being the date of the last published financial information of the Group. Harworth Estates Group owns and manages around 30,000 acres of land and other property in the UK and its portfolio had an asset value of £260.1 million as at 29 December 2012. The Company also retained a residual stake in Mine Holdings, which was the biggest producer of coal in the UK, which it valued at a nominal £1 given that Mine Holdings took over the full pension liabilities of the Company as part of the Restructuring. As such the Company did not expect any economic return from its stake in Mine Holdings and the Company's sole business focus is on extracting value from the holding in Harworth Estates Group.

As part of the Restructuring completed on 10 December 2012 the Company received an indemnity to pay restructuring fees from UKCOL. Following the fire at Daw Mill in February 2013 UKCOL has recently gone into administration followed by creditors voluntary liquidation, and is unable to meet its obligations to the Company under that indemnity. In addition Mine Holdings is now in a position where it is unable to honour its obligations in respect of the ongoing costs of the Company. HEPGL continues to pay its contribution to running costs as per its agreement. The Propco Shareholders' Agreement (as varied) provides a mechanism by which the Harworth Estates Group will now meet, subject to limitations, the Company's ongoing running costs until 31 December 2016 and the employment costs of its executive team without limit in time.

The Company had no bank borrowings or bank facilities immediately following the Restructuring completed on 10 December 2012. Due to UKCOL's inability to meet UKCOL's obligations as detailed above, on 31 May 2013 the Company took out the Facility. This made available sufficient funds to enable the Company to meet its liabilities as they fell due. The Facility terminates on 31 May 2014. In order to repay the Facility and provide sufficient funds for the Company to meet its liabilities as they fall due it is undertaking the Rights Issue to raise approximately £5.0 million net of expenses. The Company will not be in a position to repay the Facility without the net proceeds of the Rights Issue. Following completion of the Rights Issue the Company will repay the Facility in full and will return to being debt free. Given the nature of the Company and its income stream to fund its running costs, a debt-based capital structure is inappropriate and therefore an all equity capital structure is being sought.

Accordingly, the purpose of the Rights Issue, which has been fully underwritten by Peel or a member of the Peel Group (subject to certain conditions), is to repay the Facility and any surplus will provide additional working capital for the Company.

2.     Use of Proceeds

It is currently expected that the net proceeds of the Rights Issue of approximately £5.0 million will:

·      be used to fully repay the amount drawn down on the Facility; and

·      any surplus will provide additional working capital for the Company.

In addition, a portion of the gross Rights Issue proceeds will be used to pay fees relating to the Rights Issue (approximately £1.0 million).

3.     Summary of principal terms of the rights issue

The Rights Issue is intended to raise net proceeds of approximately £5.0 million. The Rights Issue is being fully underwritten (subject to certain conditions) by Peel or a member of the Peel Group.

Subject to the fulfilment of, amongst others, the conditions described below, the New Ordinary Shares will be offered for subscription to Qualifying Shareholders (other than, subject to certain exceptions, Qualifying Shareholders resident or with registered addresses in any of the Excluded Territories) by way of Rights Issue at an Issue Price of 2 pence per New Ordinary Share, in respect of Qualifying Shareholders, payable in full on acceptance.

The Rights Issue will be on the basis of

1 New Ordinary Share for every 1 Existing Ordinary Share

held by and registered in the names of Qualifying Shareholders (other than, subject to certain exceptions, Qualifying Shareholders resident or with registered addresses in any of the Excluded Territories) on the relevant Record Date and so in proportion to any other number of Existing Ordinary Shares each Qualifying Shareholder then holds and otherwise on the terms and conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders (other than, subject to certain exceptions, such Shareholders resident or with registered addresses in any of the Excluded Territories), the Provisional Allotment Letters.

The Issue Price of 2 pence per New Ordinary Share, which is payable in full by Qualifying Shareholders on acceptance by no later than 11:00 a.m. on 11 September 2013, represents:

·      a 36.00 per cent. discount to the theoretical ex-Rights price of an Existing Ordinary Share;

·      a 52.94  per cent. discount to the closing middle-market price of an Existing Ordinary Share,

in each case based on the closing middle-market price of 4.25 pence on the LSE on the last business day prior to the date of announcement of the terms of the Rights Issue.

Applications will be made for the New Ordinary Shares to be admitted to listing on the Standard Segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and dealings will commence (nil paid) in the New Ordinary Shares at 8:00 a.m. (London time) on 28 August 2013.

Any changes to the timetable of the Rights Issue will be announced by the Company in accordance with applicable rules in the United Kingdom.

The Rights Issue is conditional upon:

a)     the passing of the Resolutions by the Shareholders at the General Meeting;

b)    Admission becoming effective by not later than 8:00 a.m. (London time) on 28 August 2013 (or such later time and/or date as the Company and Peel may agree, but provided that the Acceptance Date does not fall later than 31 October 2013); and

c)     the Underwriting Agreement otherwise becoming unconditional in all respects, and not having been terminated in accordance with its terms prior to Admission.

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all future dividends and other distributions declared, made or paid after the date of their issue. The Rights Issue will result in the issue of 299,298,160 New Ordinary Shares, which will form approximately 50 per cent. of the Shares in issue immediately following the Rights Issue. Further information on the Rights Issue, including the terms and conditions of the Rights Issue and the procedure for acceptance and payment and the procedure in respect of Rights not taken up is set out in the Prospectus and, where relevant, will be set out in the Provisional Allotment Letter.

Further information on the Rights Issue, including the terms and conditions of the Rights Issue and the procedure for acceptance and payment and the procedure in respect of Rights not taken up is set out in the Prospectus, and, where relevant, in the Provisional Allotment Letter.

4.     Waiver of Rule 9 of the City Code

The Rights Issue and the Underwriting Agreement give rise to certain considerations under the City Code. Under Rule 9 of the City Code, where any person acquires, whether by a single transaction or a series of transactions over a period of time, interests in securities which (taken together with securities in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company which is subject to the City Code, that person is normally required by the Panel to make a general offer to the shareholders of that company to acquire their shares. Further, when any person individually, or a group of persons acting in concert, already holds interests in securities which carry between 30 and 50 per cent. of the voting rights of a company which is subject to the City Code, that person may not normally acquire further securities without making a general offer to the shareholders of that company to acquire their shares.

The Panel has agreed, subject to the approval of the Independent Shareholders on a poll at the General Meeting, to waive the obligation for the Concert Party to make a general offer that might otherwise arise as a result of the subscription for the New Ordinary Shares pursuant to the Rights Issue and the Underwriting Agreement. Accordingly, the Whitewash Resolution is being proposed at the General Meeting and will be taken on a poll by the Independent Shareholders. Goodweather Holdings Limited and the Related Party Director (or the registered holders of their shares) will not vote in relation to the Whitewash Resolution.

If the Resolutions are passed, the Rights Issue takes effect and pursuant to the Underwriting Agreement,

Peel (or a member of the Peel Group) subscribes for the maximum number of New Ordinary Shares issued pursuant to the Rights Issue, the Peel Group will have a direct interest in more than 50 per cent. of the voting rights of the Company, and will be able to further increase its aggregate interest in the Company without incurring any obligation under Rule 9 of the City Code to make a general offer to all Shareholders to acquire their shares in the Company.

Pursuant to the Underwriting Agreement the maximum controlling position of the Peel Group following the issue of the New Ordinary Shares pursuant to the Rights Issue is 64.57 per cent. of the Enlarged Issued Share Capital. Assuming the Committed Shareholders take up their entitlements pursuant to the irrevocable undertakings, the maximum shareholding of the Peel Group would be 56.64 per cent. of the Enlarged Issued Share Capital.

Peel has confirmed that as at the date of this announcement it does not have any intentions regarding the future business of, or strategic plans for, the Company, the locations of the Company's places of business, the redeployment of the Company's fixed assets or the continued employment of the employees of the Company and the Company's subsidiaries, the management of the Company and the Company's subsidiaries and the Company's existing trading facilities following completion of the Rights Issue. Peel will enter into the Relationship Agreement with the Company to regulate its position as a Shareholder in the Company going forward (including in relation to proposing or voting in favour of any Shareholder resolution which could result in Ordinary Shares ceasing to be admitted to the Official List - further details of the Relationship Agreement are provided at paragraph 12.11 of Part X of the Prospectus and at paragraph 6 below).

5.     Information on the Whitewash party - the Peel Group

The Peel Group is a leading infrastructure, transport, media and real estate group with assets under management of approximately £5 billion. The Peel Group currently holds significant investments in a number of businesses including ports, airports, energy, investment property, environmental assets, hotels, media and utilities.

The accounts of Peel Holdings Group Limited (the holding company of the Peel Group) are not required to be audited or filed by any applicable law or regulation. As at 31 March 2012 (the latest date to which unaudited consolidated accounts for the Peel Group have been prepared), the net assets of the Peel Group (which were then held under two separate holding companies which have, since 31 March 2012, been brought under the common ownership of Peel Holdings Group Limited as part of an internal group reorganisation) were in excess of £1bn. The Peel Group's operating profit, pre-exceptional items for the 12 months ending 31 March 2012 (based on the unaudited consolidated accounts for that period) was approximately £180m.

Goodweather Holdings Limited is a 100 per cent. owned indirect subsidiary of Peel Holdings Group Limited. Goodweather Holdings Limited is a holding company with listed investments in intu properties plc, Land Securities plc and Pinewood Shepperton plc. Peel is an intermediate holding company within the Peel Group.

The directors of Peel (''Peel Directors'') are Christopher Eves, Gillian Gelling and John Whittaker. The directors of the subsidiary, Goodweather Holdings are John Whittaker, Gillian Gelling, Christopher Eves and Neil Lees.

The obligations of the Peel Group pursuant to the Underwriting Agreement are not expected to have a material effect on the Peel Group's earnings, assets or liabilities.

No member of the Peel Group has entered into any material contracts (other than contracts entered into in the ordinary course of business) within the two years immediately preceding the date of the Prospectus.

The Peel Group is controlled by the Billown Trust whose discretionary beneficiaries are John Whittaker and other members of the Whittaker family. John Whittaker is the Chairman of the Peel Group. The Billown Trust is based in the Isle of Man and owns approximately 73.19 per cent. of the Peel Group, which is by far the most substantial asset owned by the Billown Trust.

The remaining 26.81 per cent. of the Peel Group is owned by Olayan Investments Company Establishment (OICE). OICE is the parent of the Olayan Group. The Olayan Group made its first investment in the Peel Group in 1988. The Olayan Group, is a multinational enterprise comprising 50 companies and affiliated businesses engaged in distribution, manufacturing, services and investment. In Saudi Arabia it operates or actively participates in more than 40 companies, often in partnership with leading multinationals. Internationally it is a global investor, with emphasis on both public and private equities and on fixed income securities. The Olayan Group's Chief Executive Officer is Aziz D. Syriani and its Chairman is Khaled S. Olayan, the son of its founder Suliman Saleh Olayan.

6.     Relationship Agreement

Peel and the Company have entered into a relationship agreement, which becomes effective on Admission, governing the ongoing relationship between Peel and the Company having regard to Peel's interest in the Ordinary Shares of the Company in order to ensure that the Company is capable of carrying on its business independently of Peel.

The relationship agreement replaces the principles contained in a letter dated 30 August 2007 entered into between Peel and the Company regarding the relationship between them.  Pursuant to the letter dated 30 August 2007 there is a requirement, in circumstances where the director appointed to the board of the Company by Peel resigns from his position, for Peel to make a further announcement confirming that Peel will remain bound by the intentions contained in the public announcement made by Peel on 7 March 2007 including for a six month period following the representative appointed by Peel resigning or being removed from the board of directors of the Company and, in each case, not being replaced. This resulted in Peel being bound by its statement of intention not to make an offer for the remaining shares not held by Peel in the Company for such period as Peel is represented on the board of the Company and for a further six month period following a change in such position, save, in each case, for in certain specified circumstances.

Following the replacement of the letter dated 30 August 2007 with the relationship agreement, Peel's statement of intention not to make an offer will be set aside, although it will continue to be bound by such statement (subject to the specified exceptions) for the period of six months immediately following the date on which the Relationship Agreement becomes effective and Peel will continue to be bound by the provisions of the Takeover Code concerning the making of an offer.

7.     Shareholder Approvals

The Rights Issue is subject to a number of conditions, including Shareholders' approval of the Resolutions at the General Meeting.

The General Meeting is being convened for the purposes of considering and, if thought fit, passing the Resolutions. Shareholders are being asked to vote on the Resolutions in order to provide the Directors with the necessary authority and power under the Companies Act to proceed with the Rights Issue.

In summary, the Resolutions are as follows.

·      Resolution 1: seeks Shareholders' approval, as required by the Companies Act, to the granting of authority to the Directors to exercise all the powers of the Company to allot shares in the Company up to a maximum nominal amount of £2,992,982 in respect of the New Ordinary Shares in connection with the Rights Issue.

·      Resolution 2: seeks Shareholders' approval, as required by the Companies Act, to disapply shareholder statutory pre-emption rights in relation to the issue of the 299,298,160 New Ordinary Shares pursuant to the Rights Issue. Resolution 2 proposes to permit the issue of these New Ordinary Shares pursuant to the pursuant to the Rights Issue on a non pre-emptive basis.

·      Resolution 3: seeks Independent Shareholders' approval as explained in section 4 above for a waiver of the obligation that would otherwise arise under the City Code for the Concert Party to make a general offer for the entire issued share capital of the Company as a result of completion of the Rights Issue and its obligations under the Underwriting Agreement. This resolution will need to be approved by way of a poll of Independent Shareholders.

The full text of the Resolutions is available in the Notice of General Meeting.

The Rights Issue is conditional on the passing of the Resolutions. If the Resolutions are not approved at the General Meeting, the Company will be unable to complete the Rights Issue.

8.     Importance of vote

In connection with the Rights Issue, the Company has entered into an underwriting agreement with Peel dated 7 August 2013 (the ''Underwriting Agreement''), pursuant to which the Underwriter has undertaken, subject to certain conditions, to fully underwrite (or procure the underwriting of by a member of the Peel Group) the Rights Issue. The Underwriting Agreement gives the Directors a high degree of confidence that the Company will be able to raise at least £4,992,000 in net proceeds from the Rights Issue, which will enable the Facility to be repaid and any surplus will be used to provide additional working capital for the Company.

If the Resolutions in the Notice of General Meeting are not approved, the Rights Issue will not proceed, an event of default may occur under the terms of the Facility and in such circumstances any amounts due under the Facility will become repayable. The Company could not immediately repay the Facility without the net proceeds from the Rights Issue. In certain circumstances, repayment would be due from the guarantor, Peel. If this occurred the Company would owe Peel any monies paid by them under the guarantee in respect of the Facility. If the Company is unable to repay such monies, Peel will have the right to be subrogated to the Lender's security and as such will have the same rights as the Lender which include the right to enforce the share charge, in which circumstances Peel could transfer the shares which the Company owns in HEPGL to either itself, its nominee or a third party purchaser. In such circumstances the Company would no longer benefit from its shareholding in HEPGL.

The Company would seek to repay its indebtedness by:

a)     arranging a new bank facility;

b)    selling in whole or in part its shareholding in HEPGL; and/or

c)     soliciting a buyer for all or part of the Group.

Although these actions either singularly or in combination are potentially available to the Company, the outcome and timing of each lies outside of the full control of the Company and, as a result, the Directors

cannot be confident that any will be successful or will be on terms as attractive as the Rights Issue for Shareholders. If the Company were to pursue (b) or (c), this could result in a material adverse change to the value of the Company or on the Company's ability to operate its business. If the Company were to be unsuccessful in pursuing these alternative courses of action, the Directors would be obliged to cease operating the business of the Company, the consequences of which could include administration or receivership or liquidation or other insolvency proceedings. Accordingly, it is very important that Shareholders vote in favour of the Resolutions in order that the Rights Issue can proceed.

9.     Current trading and prospects

The Group now has no operational role but remains an active investor in HEPGL, which continues to perform well since the Restructuring. The combination of the immaturity, in planning terms, of the brownfield sites with their strong strategic location, including transport infrastructure, means that a considerable amount of value can be added by the work carried out in advancing them through the planning process. It is the Company's strategy to achieve medium and long-term realisation of value from this investment. In addition, the majority interest in HEPGL, which will in due course be held by the PPF, may become available for sale and create an opportunity for the Company to assist with the orderly disposal of such stake, potentially consolidating its ownership and operational control of the business (subject to the requisite financing being available).

10.  Dividend Policy

Currently the Facility prohibits the distribution of dividend payments to Shareholders without the consent of Lloyds. Once the Facility is pre-paid or repaid, the Company will be able to pay dividends. Any dividends will be dependent on the performance of its investment in HEPGL and any dividends received from this investment. Whilst it is anticipated that HEPGL may be in a position during 2014 to arrange more flexible financing which may allow HEPGL to pay dividends whilst their bank facility remains drawn, unlike the present position, the Company would still not expect to receive a dividend from HEPGL in the short to medium term, as under the Propco Shareholders' Agreement, the Pension Trustees are entitled to receive the first £5 million of dividends due to the Company. Therefore we do not expect any dividend to be paid by the Company in the short to medium term.

11.  Irrevocable Undertakings

Goodweather Holdings Limited has irrevocably undertaken to take up all of its Nil Paid Rights pursuant to the Rights Issue, representing 87,234,470 New Ordinary Shares, Invesco has irrevocably undertaken to take up all of its Nil Paid Rights pursuant to the Rights Issue, representing 24,861,080 New Ordinary Shares, and Pelham has irrevocably undertaken to take up Nil Paid Rights pursuant to the Rights Issue representing 22,376,560 New Ordinary Shares. In addition, Steven Underwood has irrevocably undertaken to take up all of his Nil Paid Rights pursuant to the Rights Issue, representing 31,369 New Ordinary Shares and Jonson Cox has irrevocably undertaken to take up all of his Nil Paid Rights pursuant to the Rights Issue, representing 196,945 New Ordinary Shares.

In aggregate, these irrevocable undertakings are in respect of 134,700,424 New Ordinary Shares, representing approximately 45.01 per cent. of the New Ordinary Shares to be issued pursuant to the Rights Issue.

12.  Directors' Intentions

Each Director who holds Ordinary Shares has undertaken to take up in full his Rights to subscribe for

New Ordinary Shares under the Rights Issue in respect of his beneficial holding, which together amount to 228,314 New Ordinary Shares, representing 0.08 per cent. of the issued ordinary share capital of the Company.

13.  Recommendation

The Board considers the Rights Issue and the Resolutions to be in the best interests of the Company and the Shareholders taken as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Rights Issue Resolutions to be put to the General Meeting.

The Board, which has been so advised by Investec, considers the Rights Issue to be fair and reasonable as far as the Independent Shareholders are concerned and in the best interests of the Independent Shareholders.

The Independent Directors who have been so advised by Investec consider the Rule 9 Waiver to be fair and reasonable as far as the Independent Shareholders are concerned and in the best interests of the Independent Shareholders. In providing such advice, Investec has taken into account the commercial assessment of the Independent Directors. The Coalfield Resources Independent Directors unanimously recommend that the Independent Shareholders vote in favour of the Whitewash Resolution to be proposed at the General Meeting.

Steven Underwood has not taken any part in the Board's consideration of the Rule 9 Waiver and has confirmed that he will not vote on the Whitewash Resolution. The Board (other than, in respect of the Whitewash Resolution, Steven Underwood) intend to vote in favour of the Resolutions in respect of their own beneficial holdings amounting (as at 6 August 2013, being the last practicable date prior to the publication of the Prospectus) to an aggregate of 228,314 Existing Ordinary Shares representing approximately 0.08 per cent of the Ordinary Shares. The Directors have also irrevocably undertaken to take up their entitlements under the Rights Issue in respect of an aggregate of 228,314 New Ordinary Shares (£4,566.28 in aggregate).

Appendix I - Definitions

''Acceptance Date''	the date by which Shareholders entitled to participate in the Rights Issue must exercise their Rights which is expected to be 11 September 2013;
"Admission''	admission of the New Ordinary Shares, nil paid, to (i) the standard segment of the Official List and (ii) trading on the main market of the London Stock Exchange becoming effective in accordance with the Listing Rules and the Admission and Disclosure Standards of the London Stock Exchange respectively;
''Board'' or ''Directors''	the executive directors and non-executive directors of Coalfield Resources;
''business day''	a day (excluding Saturdays and Sundays and public holidays in England and Wales) on which banks are generally open for the transaction of normal banking business in the City of London;
''Coalfield Resources Independent Directors''	the directors (other than Steven Underwood);
''Closing Price''	the closing, middle market quotation of an Ordinary Share as published in the Daily Official List;
''Committed Shareholders''	Invesco, Pelham, Halifax Share Dealing Services Limited as nominee of Goodweather Holdings Limited, Steven Underwood
''Companies Act''	the Companies Act 2006;
''Company'' or ''Coalfield Resources''	Coalfield Resources plc;
"Concert Party"	members of the Peel Group from time to time and Steven Underwood;
''Daily Official List''	the daily record setting out the prices of all trades in shares and other securities conducted on the London Stock Exchange;
''Dealing Day''	a day on which dealings in domestic equity market securities may take place on the London Stock Exchange;
"Equiniti''	Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA;
"Disclosure and Transparency Rules"	the rules made by the FCA under Part VI of FSMA in relation to the dissemination of price-sensitive and other information
''Excluded Territories''	Australia, Canada, Japan, New Zealand, the Republic of South Africa and the United States and any jurisdiction where the availability of the Rights Issue would breach applicable law and Excluded Territory shall be construed accordingly;
''Existing Ordinary Shares''	the 299, 298, 160 existing Ordinary Shares in issue as at the date of this document;
''Ex-Rights Date''	28 August 2013;
''Facility''	the facility agreement entered into on 31 May 2013 between the Company and Lloyds, providing the Company a term loan facility of £5,000,000, with all loans drawn down being repayable on 31 May 2014;
''FCA''	the Financial Conduct Authority of the United Kingdom which is authorised under FSMA. References to the FCA include references to the FSA prior to 1 April 2013;
"Form of Proxy"	the form of proxy accompanying the Prospectus for use in connection with the General Meeting;
''FSMA''	the Financial Services and Markets Act 2000 (as amended);
''Fully Paid Rights''	rights to acquire New Ordinary Shares, fully paid;
''General Meeting''	the general meeting of Coalfield Resources to be held in connection with the Rights Issue at the offices of Eversheds LLP, One Wood Street, London, EC2V 7WS on 27 August 2013 at 10:00 a.m., the notice of which is incorporated in the Prospectus;
''Goodweather Holdings''	Goodweather Holdings Limited, a subsidiary of Peel Holdings Group Limited;
''Group'' or ''Coalfield Resources Group''	the Company, its subsidiaries and subsidiary undertakings and/or (where the context requires) any one or more of them;
''Harworth Estates Group'' or ''Propco Group''	Harworth Estates Property Group Limited and its subsidiaries;
''Harworth Estates'' or ''HEPGL'' or ''Propco''	Harworth Estates Property Group Limited, a private limited company incorporated in England and Wales (registered number 08232459) whose registered office is at AMP Technology Centre, Advanced Manufacturing Park, Brunel Way, Rotherham, S60 5WG;
''Harworth Estates'' or ''HEPGL'' or ''Propco''	Harworth Estates Property Group Limited, a private limited company incorporated in England and Wales (registered number 08232459) whose registered office is at AMP Technology Centre, Advanced Manufacturing Park, Brunel Way, Rotherham, S60 5WG;
''HEPGL''	Harworth Estates Property Group Limited, a private limited company incorporated in England and Wales (registered number 08232459) whose registered office is at AMP Technology Centre, Advanced Manufacturing Park, Brunel Way, Rotherham, S60 5WG;
''Independent Directors"	the Directors other than the Related Party Director;
''Independent Shareholders''	the Shareholders other than Goodweather Holdings Limited and the Related Party Director;
''Invesco''	Invesco Perpetual;
''Investec''	Investec Bank plc;
''Issue Price''	the issue price of 2 pence per New Ordinary Share;
''Listing Rules''	the listing rules made by the UKLA under Part VI of FSMA;
''Lloyds'' or ''Lender''	LloydsTSB Bank Plc;
''London Stock Exchange'' or ''LSE''	London Stock Exchange plc;
''Mine Holdings''	UK Coal Mine Holdings Limited, (in administration) (now called Ocanti No. 1 Limited) a private limited company incorporated in England and Wales (registered number 08223111) whose registered office is at Harworth Park, Blyth Road, Harworth, Doncaster, DN11 8DB;
''New Ordinary Shares''	the new Ordinary Shares to be issued by the Company in accordance with the Rights Issue;
''Nil Paid Rights''	rights to acquire New Ordinary Shares, nil paid;
''Non-CREST Shareholders''	Shareholders whose Shares are on the UK Register and are held in certificated form;
''Non-Rights Shares''	those New Ordinary Shares which no member of the Peel Group is entitled to take up as a shareholder in the Company pursuant to the Rights Issue;
''Notice of General Meeting''	the Notice of General Meeting which forms part of the Prospectus;
''Official List''	the Official List of the FCA;
''Ordinary Shares''	ordinary shares of one (1) pence each in the capital of the Company and Ordinary Shares shall be construed accordingly;
''Overseas Shareholders''	Shareholders who are resident in, or who are citizens of, or who have registered addresses in, territories other than the United Kingdom;
''Panel"	the Panel on Takeovers and Mergers;
''Peel Group''	Peel Holdings Group Limited (a company incorporated in the Isle of Man with registered number 6198V) and its subsidiary undertakings (as defined in Section 1162 of the Companies Act) from time to time;
''Peel'' or ''Peel Holdings''	Peel Holdings Limited, (a company incorporated in the Isle of Man), Billown Mansion, Ballasalla, Isle of Man, IM9 3DL;
''Peel Directors''	the directors named in paragraph 5 of this document;
"Pelham'	Pelham Capital Management LLP;
''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 trustees of the Industry - Wide Mineworkers' Pension Scheme;
Pound Sterling'' ''sterling'' or ''£'' or ''GBP'', or ''pence'' or ''p''	the lawful currency of the United Kingdom;
''PPF''	the Pension Protection Fund;
''PRA''	the Prudential Regulatory Authority;
''Propco Shareholders' Agreement''	the agreement between the Company and the Pension Trustees and HEPGL to govern the Company's respective rights and interests in HEPGL following the Restructuring;
"Prospectus"	the document comprising a circular and the prospectus to be issued by the company on 7 August 2013 for the purposes of the Rights Issue together with any supplements or amendments;
"Prospectus Rules"	the rules made by the FCA under Part VI of FSMA in relation to offers of transferable securities to the public and admission of transferable securities to trading on a regulated market;
''Provisional Allotment Letters'' or ''PALs''	the renewable provisional allotment letters issued to Qualifying Non- CREST Shareholders;
''Qualifying CREST Shareholder''	Qualifying Shareholders holding Ordinary Shares in uncertificated form;
''Qualifying Non-CREST Shareholder''	Qualifying Shareholders holding Ordinary Shares in certificated form;
''Qualifying Shareholder''	holders of Ordinary Shares on the Company's register of members at close of business on the Record Date;
''Record Date''	close of business on 22 August 2013;
''Related Party Director''	Steven Underwood;
''Relationship Agreement''	the relationship agreement dated 7 August 2013 between Peel and the Company governing the ongoing relationship between the Company and Peel having regard to Peel's interest in the Ordinary Shares of the Company in order to ensure that the  Company is capable of carrying on its business independently of Peel;
''Resolutions"	all the resolutions to be proposed at the General Meeting as set out in the Notice of the General Meeting;
''Restructuring''	the restructuring of the business formerly carried on by the Company and its group into two separate businesses comprising the Mining Group and the Propco Group which completed on 10 December 2012, as is more particularly described in Part III of the circular to the Company's shareholders dated 18 October 2012;
''Rights''	the Nil Paid Rights and the Fully Paid Rights;
''Rights Issue''	the 1 for 1 rights issue announced by the Issuer on 7 August 2013;
''Rights Issue Resolutions''	resolutions 1 and 2 as set out in the Notice of General Meeting to be considered and if thought fit, passed by Shareholders at the General Meeting;
''Rule 9 Offer''	a mandatory offer required under Rule 9 of the Takeover Code;
''Rule 9 Waiver''	the waiver by the Panel of the obligations which would otherwise arise on the Concert Party under Rule 9 of the Takeover Code on completion of the Rights Issue;
''Shareholders''	holders of Ordinary Shares;
''Takeover Code''	the City Code on Takeovers and Mergers;
''Underwriter''	Peel Holdings Limited;
''Underwriting Agreement''	the agreement dated 7August 2013 between the Company and Peel pursuant to which Peel has undertaken to underwrite (or procure the underwriting of), subject to certain conditions, the Rights Issue;
''UK Listing Authority'' or ''UKLA''	the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of FSMA;
''uncertificated form''	recorded on the relevant register or other record of the share or other security concerned as being held in uncertificated form in CREST, and title to which, by virtue of the Regulations, may be transferred by means of CREST;
''United Kingdom'' or ''UK''	the United Kingdom of Great Britain and Northern Ireland;
''United States'' or ''US''	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia;
''Whitewash Resolution''	resolution 3 as set out in the Notice of General Meeting to be considered and if thought fit, passed by Shareholders at the General Meeting relating to Rule 9 of the City Code.

All references to legislation in this document are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension thereof.

In this document, unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words denoting any gender shall include all genders.

 

END

 

 

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