Production of coal from Daw Mill represented around a third of UK Coal’s revenue and the forced closure of the mine had threatened the ongoing viability of UK Coal Operations’ remaining two deep mines and six surface mines.
As a result of the problems that the Daw Mill fire created for UK Coal, both UK Coal Mine Holdings Ltd (UKCMHL) and UK Coal Operations Ltd (UKCOL) have today gone into administration. David Kelly, Rob Hebenton and Ian Green from PwC have been appointed administrators of the companies by Birmingham High Court following an application by the directors. Graham Newton and Paul Bates of BDO LLP were also appointed Joint Administrators of Mining Services Ltd.
The administrators have separated out the viable operations of the group and agreed a compromise with major creditors, including the Industry Wide Pension Funds, which will see the pension schemes transfer to the Pension Protection Fund in due course. The viable mining operations have been successfully restructured and their assets will now be held in individual companies owned by a new business which will operate as UK Coal Production Ltd.
Kevin McCullough, Chief Executive of UK Coal, stated “Today is very much a day of mixed emotions,
but this is the best outcome that it was possible to achieve. “Entering administration and the subsequent restructuring was the only way we could preserve any of the business and while I’m delighted we’ve saved 2,000 jobs, we’ve also had to make some very difficult decisions.
“I’m pleased that we managed to transfer 120 of our Daw Mill colleagues to our other mines following the fire. Our thoughts today also rest with the 350 colleagues who will now, regrettably, be made redundant as a result of Daw Mill closing.
“I’d like to thank everyone that has helped us reach this position, which would not have been possible without the support of the Pension Protection Fund, our customers, suppliers, all parts of Government, our employees and their families and trade unions. It means that this country can still produce coal on a reasonable scale. It may be a small industry, but when 40% of our energy still comes from coal it makes absolute sense to use as much British coal as possible to help keep energy bills from being even higher.
“Along with all of my colleagues, I look forward to working with our customers and suppliers as we rebuild the business following the disastrous fire.”
UK Coal has worked closely with the Pension Protection Fund and, with its advisers, has developed an innovative plan which secures 2,000 jobs and provides protection on accrued benefits for employees. As well as retaining their jobs by transferring to the new company, the 2,000 employees will retain the same terms and conditions.