Harworth Gp Regulatory News (HWG)

Coalfield Resources plc

Coalfield Resources plc to focus solely on property portfoliofollowing 2013 UK Coal restructuring

Coalfield Resources plc ("CfR plc" or "the Company") brings to the attention of the market a statement issued today by UK Coal Mine Holdings Ltd and UK Coal Operations Ltd ("Mine Holdings") which confirms that administrators have been appointed to these companies. The statement can be viewed at http://www.ukcoal.com/media/latest-news/.

Context

In December 2012, CfR plc completed a complex and fundamental restructuring following long-term and persistent underperformance at the Daw Mill colliery, and in recognition of the scale of debt to the mining pension funds ("Pension Funds") and to the banks. This restructure separated the mining and property businesses. Mine Holdings ceased to be responsible for the Group's bank debt and both Harworth Estates ("HEL") and CfR plc ceased to have liability for the c£450m pension deficit. The key features of the 2012 restructure were:

·; CfR plc maintained a minority shareholding in Mine Holdings to provide governance of the mines on behalf of the principal economic beneficiary, the Pension Funds. No economic return was expected from Mine Holdings as all surplus cash was to accrue to the Pension Funds

·; CfR plc ceased to be responsible for running the mines which had formerly been owned by UK Coal Mining ltd

·; The Pension Funds acquired the majority of the shareholding in HEL and injected funds to facilitate the release of value from the £260 million of former coalfield property assets

·; CfR plc retained 24.9% of HEL business for the benefit of shareholders and undertook an active role as an investor, alongside the Pension Funds

Restructuring of Mine Holdings and consequences for CfR plc

Following the catastrophic fire on 22 February 2013 at Daw Mill colliery and its effect on Mine Holdings, CfR plc has assisted the management of Mine Holdings and all parties in trying to find a solution to this latest challenge. Without the benefit of the December 2012 restructure, it is virtually certain that the fire would have brought down the entire former group structure.

Following today's further restructuring of the mining business, CfR plc will have no equity interest in, nor any responsibility for, on-going mining operations. Mine Holdings had an obligation under the 2012 restructuring to meet the running costs of CfR plc. On the failure of Mine Holdings, this liability passes to HEL until the end of 2016. This obligation has been re-confirmed by the relevant parties as part of the overall restructuring arrangements today.

However, as previously announced, CfR plc retained liability from the restructure in December 2012 for professional fees incurred in 2012 of c£3.5 million, which were due to be reimbursed by Mine Holdings and substantially paid before now. Recovery from the administrator is expected to be very limited. The only continuing residual liability of CfR plc related to Mine Holdings is an annual payment of £189,000 to a small pension plan for the former Blenkinsopp colliery. The economic burden of this liability has been taken on by the new mining companies and liability of CfR plc for this scheme has been secured by a charge on the freehold of the on-going deep mines.

As recently announced, CfR plc secured a £5 million bank facility to meet the residual liabilities for fees, which are in the process of being settled. The banking facility has been granted on the basis of a limited guarantee to Lloyds from the Company's largest shareholder, the Peel Group, and also on the basis that the Company will carry out an equity fundraising to repay the facility. CfR plc expects to undertake the fundraising in the next few months. The Peel Group has offered further support to the Company by agreeing, subject to the satisfaction of certain conditions, to underwrite the fundraising.

Harworth Estates

Following the restructure it is expected that the Pension Funds' shareholding in HEL will transfer to the Pension Protection Fund ("PPF"). The gross property assets of HEL at 29th December 2012 were £261.9 million and the net assets were £221.7 million (net of bank debt). The business has demonstrated a track record of realising value and is on track to meet its shareholder expectations in 2013.

Jonson Cox, Chairman, said "The 2012 restructuring of UK Coal separated the property and mining interests. While the catastrophic fire at Daw Mill could not be foreseen, the 2012 restructuring has justified the precautions taken to ensure that such an event would not bring down all parts of the former group. CfR plc has played an active part in finding a solution for the mines and preserving 2,000 jobs. The Company's role in the mining business is now at an end and the current economic value is in its shareholding in Harworth Estates. The Company will continue to be an active investor seeking long-term value for both its own shareholders and the PPF.

"We look forward to working closely with the PPF to realise the value inherent in Harworth Estates, and we wish former colleagues in mining well in their new structure".

End

Enquiries

Jonson Cox, Chairman 01302 755 100

Jeremy Hague, Finance Director 01302 755 100

Media

Anthony Cardew / Tom Horsman

Cardew Group 020 7930 0777