UK Coal Looks For Third Lender To Fund ‘Revolver’ Facility

UK Coal recently hired Close Brothers to help them obtain funding to extend their facilities. The coal company, one of the UK’s largest, has entered negotiations with lenders after their bank, Landsbanki, based out of Iceland, was nationalised. 

UK Coal already has an agreement with their banks which lasts three years, and are looking to extend the arrangement to 2014. The facility in questions, known as the ‘revolver’ facility, is worth an estimated £52 million. The facility is backed by three banks in total, one being Landsbanki, who plan to pull out at the close of the contract in September 2010, and the other two being GE and Lloyds Banking Group.

The firm is rumored to have already found a number of lenders to replace Landsbanki when they pull out in September. Lloyds, the majority holder, and GE reportedly have no plans to leave the contract, and will continue to cover two-thirds of financing until 2014. 

UK Coal also plans to ask for a raise for the facility from £52 million to an estimated £70 million. UK Coal recently renegotiated contracts with a few of their larger customers, namely E.On and EDF Energy, which will provide the company with an extra £100 million in cash. The extra money will be used to develop mines.

UK Coal was founded in 1994 by RJB Mining when they purchased coal mines from British Coal for £815m. 6% of the UK’s electricity generated by coal is supplied by UK Coal. The company has nine mines, employs 3,100 UK residents, and maintains over 90 million tonnes of coal reserves.