MOPG PR 75 27/8/10


WILL UK COAL plc BE ABLE TO AFFORD THE COST OF RESTORING THE ASHBY CANAL?

When the Auditors of a company state

“These disclosures indicate the existence of material uncertainties which may cast significant doubt about the company's ability to continue as a going concern.” (1)

persons dealing with that company whether they are shareholders, employees or expecting that company to provide some kind of benefit, should take notice. The company in question is UK Coal plc, who published their Interim Statement for first six months of 2010 on 25/8/10. They make dismal reading:

Losses before tax £93.2m
Accumulated losses £257m
Net Assets £58.3m (2)

These are the financial figures causing their independent Auditors, PriceWaterhouseCoopers, to make the above comment when qualifying UK Coal’s accounts.

The Minorca Opencast Protest Group have been following the financial fortunes of this Company for some time and we have produced figures that have been quoted by the influential Economist Intelligence Unit, that most of these losses have been accumulated by the mining division, and these losses now total nearly £289m. These figures have just been updated in our Briefing Note C1 “UK Coal’s Financial Situation” 2nd edition, August 2010, which is published today.

The Company announced on 27th July that it was to restructure its activities into a property division and a mining division with the intention of these being separate profit centres. If the Minorca site comes under the mining division and this division is carrying £289m of debt, the Division’s first priority will be to repay this level of debt. If this cannot be done then there is a real risk of bankruptcy – indeed it could be argued that with net losses over assets of nearly £200m now, the Company as a whole is already technically bankrupt.

If that event occurred and there were no Restoration Bonds in place to finance the restoration of the site and no Bankers Guarantees for the full commercial cost of fulfilling the obligation to restore part of the Ashby Canal and to provide Community Funds, then there is the real risk that we could be left with no coal, a big hole and a big ditch and an owner of the site who has no money. A former Company Director, Terry Lidster has already commented about UK Coal plc’s financial state:

“If Mr. Bricknell (founder of Measham and Ashby Canal Enthusiasts) believes that UK Coal will honour any of these "pledges" he needs a reality check. The mining part of UK Coal is essentially "bust". This part of the company will either be sold or "re-structured" in the near future and the "new" company / owners will have no obligation to these "pledges".” (3)

This comment was made before the first half figures for UK Coal plc were published. The sentiment behind the statement is right, but given that this is a planning application which is being considered, the outcome would be rather different. In this case it could be the company which owes the site with the obligation to restore both the site and the canal which goes “bust”, leaving the County Council with the prospect of trying to enforce unenforceable obligations on a company with no assets.

Although we in MOPG are opposing this application, we want to avoid any possibility of being left in this situation if UK Coal plc gains planning permission. Given the degree of uncertainty hanging over UK Coal’s financial future we are asking everyone, proposers and opposers of the application alike, to write to Leicestershire County Council to say that as a condition of gaining planning permission, UK Coal plc must provide a Restoration Bond and give these Bankers Guarantees.

Steve Leary for MOPG said:

“MOPG are only drawing attention to what has already been stated by UK Coal’s Auditors, that doubts exist over the future viability of this company. As we have explained, this puts at risk the ability of this Company to honour its obligations.

Whatever the differences are between local people over the merits for or against the Minorca Surface Mine Application, we should all make every effort to avoid the worst of all possible outcomes, of having no coal left to be sold, an opencast site left in a derelict state and a canal where the promised restoration is far from complete.

We are therefore inviting all parties, M.A.C.E. included, to join with us to ensure that local communities get the benefits offered as a consequence of UK Coal plc gaining planning permission to work the Minorca site. This means writing to Leicestershire County Council and asking them to make the following a condition attached to the granting of planning permission:

That a Restoration Bond be arranged to cover the cost of restoring the Minorca site.

That UK Coal plc should provide a Bankers Guarantee to cover the full cost of restoring the Ashby Canal to a predetermined point.

That UK Coal plc should provide a Bankers Guarantee to cover the full cost of providing the £150,000 Community Fund.

We look forwards to hearing that M.A.C.E. has understood how serious UK Coal’s financial situation is and has written to Leicestershire County Council a letter which does ask for a Restoration Bond and the two Bankers Guarantees.”

References

1) The Financial Results for the six months ended 26 June 2010 also from UK Coal’s own web site p 16 @
 http://www.ukcoal.com/regulatory-news

2) See Briefing Note C1 UK Coal’s Financial Situation and the Minorca Application, p3, 2nd edition, Minorca Opencast Protest Group, August 2010

@
 http://www.leicestershirevillages.com/measham/mopg-briefing-notes-series.html

3) See Terry Lidster’s comment on “500 are quick off mark to sign opencast petition” Burton Mail, 24/8/10 @

 http://www.burtonmail.co.uk/News/500-are-quick-off-mark-to-sign-opencast-petition.htm

END

FOR MORE INFORMATION ON THIS PRESS RELEASE CONTACT:
STEVE LEARY, SPOKESPERSON, MOPG

tel 05601 767981,
email  steve46leary@googlemail.com

FOR MORE INFORMATION ON MOPG PLEASE GO TO:
 http://www.mopg.co.uk or
 http://www.leicestershirevillages.com/measham/minorca-protest.html