Sources close to Coal Investments, the coal mining company run by the former British Coal executive Malcolm Edwards yesterday rejected rumours that money-raising difficulties had led to it pulling out of the bidding for the coal subsidiary of the British Fuels Group (BFL), one of British Coal's last surviving businesses.
"We're still very much there," a source close to the company said. There have been industry worries about Coal Investment's bid ever since the company, which is spending heavily on investment for its coal mining operations, put out a profits warning last month.
There is also concern that Coal Investments' management has enough on its agenda without the further worries caused by a bid for BFL Coal.
However, a source said that a bid would not have been made if it was felt the company could not find management of the right calibre, and the same source said any funding for a successful bid would not come from the equity market.
"The Coal Investments bid involves a very innovative form of funding, which is unusual for a public company," said one source with knowledge of the discussions.
It is believed that three bids, including one from Coal Investments and another from the management team, went in to the Government's advisers on the deal, Samuel Montagu, earlier this week. The bids are said to have been up to pounds 50m for BFL's coal business, while there are separate bidders for BFL Oil. The solid fuel business in Northern Ireland, meanwhile, has attracted much attention.
The sale of BFL, one of the country's biggest distributors of solid fuels and petroleum products, began in April. The management buyout team is believed to have backing from Apax, the specialist venture capital finance house, and the third bidder is believed to be Fernwood, a Hull-based, private coal importing company. RJB Mining, which bought most of England's minefields from British Coal at the beginning of the year, is not believed to be one of the bidders.