Harworth Estates has secured a new £65m facility with Royal Bank of Scotland that it said “has been undertaken on more appropriate commercial terms for a successful property business” than its existing debt with Lloyds and Barclays.
The new five-year revolving credit facility will be used towards paying back £60m of borrowings from Lloyds and £17.8m from Barclays. The RBS loan has an interest rate of 2% above Libor.
Mike Richardson, finance director of Harworth said: “The new facility with RBS creates a senior financing platform to enable the Harworth Estates business to drive further shareholder value from both its existing real estate portfolio and the wider real estate markets.”
The financing follows the news earlier this week, that Coalfield Resources – formerly UK Coal – had bought the 75.1% of Harworth that it did not already own for £150m. The Lloyds facility was put in place in December 2012, when UK Coal was restructured and at a time when the debt market was much less liquid and more expensive.
Harworth Estates was created in 2012 when UK Coal was split into a mining and a property division, and the pension liabilities of property division isolated from those of the mining operations. UK Coal, now Coalfield Resources, retained a 24.9% shareholding in Harworth, with the remaining 75.1% transferred to the Pension Trustees, subsequently the Pension Protection Fund, in order to meet UK Coal’s debts to its pension schemes.
Coalfield Resources it purchased the 75.1% stake because the directors “believe that the minority position in the capital structure of Harworth may have restricted the recognition of the value of the business”.
Haworth Estates owns 27,000 acres of land in the UK across 200 former coalfield and brownfield sites.