Hargreaves acquire ATH assets from Aardvark
More than 200 jobs saved as Hargreaves Services acquire certain assets in £10.4 million deal
HARGREAVES Services plc, the UK’s leading supplier of solid fuels and bulk material logistics, have acquired certain assets related to the business of Aardvark TMC Ltd, the principal operating subsidiary of the ATH Group, for £10.4 million.
The acquisition is being funded from the proceeds of the £42 million placing announced on 17 April 2013 to fund expansion of Hargreaves’ portfolio of surface mining assets.
On 1 March 2013, it was announced that, following ATH Resources plc entering administration in early December 2012, Hargreaves’ subsidiary Hargreaves Surface Mining Ltd had purchased the secured debt owed by Aardvark and certain other companies within the ATH Group.
The debt, which at that time had a face value of £12.5 million, was purchased from private equity firm Becap Capital Coal Ltd for a cash sum of £5.0 million.
Since the acquisition of the debt, Durham-based Hargreaves have supported a project to restructure the Aardvark business in conjunction with management and major stakeholders.
The objectives of the restructuring were twofold: first, to create an investment platform that would allow viable sites to continue to operate, thereby safeguarding employment; and secondly, to create a new structure and process, independent of ongoing operations, to help to address outstanding historic restoration obligations.
It is understood that, under the restructuring, all 237 employees of Aardvark’s mining business are to be offered new contracts of employment by Hargreaves Surface Mining Ltd. As part of the arrangement, Hargreaves will also have the option to acquire the operating sites at Netherton and Duncanziemere from Aardvark once certain outstanding restoration conditions have been satisfied.
In the meantime, Hargreaves will provide full mining, production and marketing services, as well as funding for any future restoration liability, to ensure that these mines continue in operation.
The company, which says it expects to produce 700,000 tonnes in the next financial year from the Netherton and Duncanziemere sites, has also entered an agreement with the Buccleuch Estate to provide both restoration and mining services at the mothballed Glenmucklock site, which would increase its total production in Scotland to around 1 million tonnes.
Hargreaves estimate that the proven coal reserves at sites with planning permission are in excess of 3 million tonnes, while proven reserves at sites that are in the planning process are around 2 million tonnes.
Commenting on the deal, Hargreaves chief executive officer, Gordon Banham (pictured), said: ‘This transaction brings to an end a long and complex restructuring process. While it has been a lengthy and difficult exercise, we are very pleased with the end result.
‘In comparison with an unstructured liquidation, we have saved or created more than 230 jobs and been able to continue mining operations at two of the key sites. The continuance of operations at Netherton and Duncanziemere, together with the planned resumption of activity at Glenmuckloch, will greatly assist in achieving long-term restoration.
‘We will use the staff and operations that we have acquired to continue to invest in developing a profitable and sustainable surface mining business in Scotland.’