Share placing aims to raise UK Coal £100m

UK Coal aims to dig itself out of a cash flow hole by raising £100 million from investors.

The Midlands and Yorkshire miner said it is raising the money through a firm placing and open offer backed by 28% shareholder John Whittaker, the northern property baron.

UK Coal, which last month reported an £81 million half-year loss, needs the money to plug the gap between now and the end of a major investment programme in its mines early next year and the kick-in from later in 2010 of new coal supply contracts on vastly improved prices.

Chief executive Jon Lloyd said that the group's cash flows had been constrained by its £110 million investment in new richer seams at its Thorseby and Kellingley mines, as well as legacy contracts with coal-burning power stations at much lower prices than are available today.

As a result, the group's debts have risen to £147 million and are expected to peak next year at £250 million.

The share offer has been priced at 75p, a 38% discount to last night's close.

Advisor Gleacher Shacklock and underwriters Evolution and Numis are sharing fees of £6.5 million to get the UK Coal stock away.