LONDON (Alliance News) - Coalfield Resources PLC Thursday said Harworth Estates Property Group, its only significant investment, has not been able to secure an extended wind-down of two of Britain's last remaining deep coal mines operated by UK Coal Production Ltd, after Hargreaves Services PLC on Wednesday said that it will no longer be involved in providing loan finance to UK Coal as part of coal miner's plan to close the mines.
Harworth Estates, as the freeholder of most UK Coal's sites, had been in talks with the British government and UK Coal over a loan to allow the managed closure of the company's mines.
In April, UK Coal said it planned to close two of its three remaining deep-pit coal mines, resulting in the loss of 1,300 jobs from its total 2,000 workforce. The UK government agreed to give the country's largest coal producer a GBP10 million loan, in addition to an equal loan from the private sector, to facilitate the "managed closure" of the mines.
In the same statement on April 10, solid fuels and bulk material logistics company Hargreaves Services said it was working closely with the government and key stakeholders with the intention of providing marketing and operational support on commercial terms, including the provision of a GBP5 million secured loan to UK Coal.
However, Hargreaves Services said in a statement Wednesday that it was not possible to agree a plan that it is able to support.
"In these circumstances the company is no longer able to provide loan finance and has now withdrawn from the process," Hargreaves Services said in the statement.
Harworth Estates said Thursday that it no longer expects the wind down and closure plan to proceed.
Harworth "was a supportive participant in the consortium but has reminded its shareholders that it provided for the anticipated higher cost of an immediate closure of UKCP mines in its 2013 accounts," Coalfied said in a statement.
Harworth does not expected a further negative impact on its property valuations, and as such Coalfield said it does not expect a reduction in the carrying value of its investments in Harworth.
Following a restructuring, Coalfield Resources has effectively become a property company through its 24.9% shareholding in Harworth Estates Property Group Ltd, the property business it owns jointly with its former mining company's pension fund.
Harworth Estates owns and manages 30,000 acres across 200 sites, including commercial, residential and tenancy projects. Wide Coal Pension Funds holds the remaining stake in the firm.
Coalfield shares were quoted down 0.2% at 6.11 pence Thursday.