British Coal to be sold free of debt: Government plans to privatise mines without borrowings by the end of this year

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The Independent Online
THE GOVERNMENT plans to privatise British Coal free of debt and to complete the sale by the end of the year. British Coal's last annual report showed that the company and its subsidiaries had pounds 1.07bn in outstanding government loans at the end of March 1993.

Timothy Eggar, the Minister for Energy, yesterday launched the marketing campaign for the sale of the coal industry, saying that 32 deep mines could be in private hands by the beginning of 1995. But his figure includes collieries that have already been closed by British Coal and some that are already being operated under licence by private companies. British Coal has only 17 deep mines in operation and is hoping to close Tower colliery in Wales.

Mr Eggar declined to put a price on the sale of British Coal, which industry experts estimate could fetch up to pounds 500m. It is unclear exactly how much of British Coal's historic liabilities - thought to be about pounds 2bn - will have to be shouldered by purchasers. But the bulk of the liabilities are expected to be transferred to the Government's planned coal authority.

The industry is to be sold in up to five regional packages of deep and open-cast mines. Should Tower be closed, the South Wales package will contain only open-cast sites.

The purchasers of the packages will inherit contracts for the sale of coal to the electricity-generating industry that will run for about three years. The largest packages of mines include one covering Yorkshire and the Durham coalfields and another in the Midlands.

In addition to these regional groupings, six pits where production has ceased but which have been kept on a care-and-maintenance basis will be offered for sale.

The Department of Trade and Industry plans to send preliminary information to up to 100 companies that have expressed tentative interest, including some overseas.

Potential bidders must submit 'pre-qualification applications' by 25 May to NM Rothschild, the merchant bank advising the Government. In order to receive further information applicants will have to pay pounds 15,000 for each package of mines in which they are interested and a further pounds 5,000 for each care- and-maintenance pit. Those that do not bid successfully will receive a 75 per cent refund.

Full information will be made available to those qualifying for the second stage by early June. Mr Eggar, who has not ruled out the sale of all five packages to one buyer, said formal bids should be submitted by the middle of September with a view to completing the sale by the end of the year.

Mr Eggar said that should the industry be sold as one, it would be among the 10 largest private coal companies in the world. 'Our intention remains to have the largest economically viable coal industry. Privatisation will free the industry from the restrictions of state control,' he said.

(Photograph omitted)