UK Coal seeks liquidation after mine closure

UK Coal Operations is seeking a voluntary liquidation after the largest of its two mines was closed, reports the Financial Times (subs. required).

The move comes after a fire at the Daw Mill deep-pit coal mine in Warwickshire, where the company lost 100 million pounds ($156 million) in equipment, 160 million pounds ($250 million) in coal and 35 million pounds ($55 million) in other costs.

The company told the Financial Times it had insufficient cash to meet daily operating costs and the restructuring was inevitable.

The liquidation proposal means creditors would receive approximately 32 pence for every pound of debt. The principal losers would be four power generators who had prepaid for coal production:

Customers who prepaid  for coal — like power generators EDF SA, Drax Group, SSE Plc and Eon — would be the main business losers in such a deal.

Employees are also affected with 2,000 jobs and  6,800 pensions on the line.

Image:  Amanda Slater, Flickr