LONDON (ShareCast) - Troubled coal miner UK Coal has announced a restructuring plan as it battles against debts and a massive pension deficit.
The group currently owes £138.3m to banks and customers, while the pension fund has a deficit of £430m.
Added to this, the group is experiencing severe operational problems at two of its main mines: Daw Mill near Coventry and Thoresby in Nottinghamshire.
The restructuring will see the pension fund defer contributions for two years while each of the firms nine mines is hived off into a separate business, avoiding one mine failure from bringing down the rest of the group (which is essentially what is happening now).
In the half year to the end of June total group revenue dropped 23% to £198.3m resulting in a loss after tax of £20.6m.
The poor performance at Daw Mill and Thoresby reduced production to 3.3m tonnes, against 4.1m in the prior year.
UK Coal provides fuel for around 5% of total UK electricity production and is a major supplier to most of the countrys generating companies.
Commenting on the results, the groups Chairman Jonson Cox said: Our first half year results for 2012 show a disappointing performance, caused by the poor Daw Mill performance in Q1 and the weakening coal price seen in Q2 [second quarter]
The production problems and the risks of operating Daw Mill in its current structure, when combined with the pension deficit and the level of bank and generator debt, led the board to conclude that a restructuring of the business was necessary to secure a stable platform for UK Coal and its stakeholders.
The stock, which has fallen 92% in the last 10 years, was down 14.4% by 10:59.