Britain's biggest coal producer, UK Coal, has reached an agreement with its pension trustees that will see them extend a support package worth £90m up to the end of 2015.

This means that the firm is now a step closer to securing its future after it reported a loss of £20.6m in the six months to June.

The loss came after a period of poor performance from its largest mine Daw Mill in Coventry, which contributed to a 20% fall in production.UK Coal says it is "unlikely to continue operations beyond 2014 when coal panels will be exhausted". Daw Mill employs 800 staff.

However, under what the Press Association called a "highly complex" plan, the mining business will now be left with an affordable pension deficit reduction scheme and would be free of bank debt if the support package continues up to the end of 2015.

UK Coal's pension funds have a reported deficit of approximately £440m and the firm also owes its customers and banks £138.3m. The total pension liabilities of UK Coal now stand at around £900m.

The company also announced that the schemes will invest £30m in UK Coal's property division Harworth Estates in return for a stake of 75.1%. The division, Harworth Estates, has 30,000 acres of land and other property.

According to the agreement, from 2014 onwards the pension funds will receive a minimum of £30m annually in return.

Jonson Cox, chairman of UK Coal said: "We are really at the point where a restructuring of the balance sheet is now agreed by a heads of terms agreement and that moves us a step towards being able to ensure the survival of UK Coal."

First published 13.08.2012
azeevalkink@wilmington.co.uk