RJB risks breach of bank deal over strike

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The Independent Online


RJB Mining, Britain's largest privatised coal group, could be in technical breach of an agreement it made with its bankers if Arthur Scargill's strike over pay receives widespread support, according to banking and company documents seen by The Independent.

Yesterday the NUM executive called for a 24-hour strike next Tuesday and Friday with walk-outs on each succeeding Monday and Friday. The proposed action follows a ballot last month in which 83 per cent of those members who replied said they were prepared to take part in a series of selective strikes.

Henry Richardson, a senior NUM official, said the industrial action would continue until management at RJB Mining returned to the negotiating table over their provisional plan to maintain current basic rates for the next three years.

Referring to Richard Budge, the company's chief executive, he said: "The guy thinks nothing is going to happen but he is going to have a shock. Budge is used to open-cast workers. Now he's dealing with real miners." RJB Mining condemned the move, saying the NUM's action was "ill-advised and damaging to the coal industry as a whole".

Documents seen by The Independent show that the company is already close to a technical breach of one of the conditions that accompanied the pounds 494m borrowing agreement it made with its bankers when it acquired the bulk of England's coal fields at the end of last year.

The same documents also show, however, that the banks are relaxed about this technical breach, given that the company has been making a series of hefty loan repayments, reducing its overall facility with the banks to approximately pounds 276m by mid-July compared with pounds 421m in April.

Gordon McPhie, RJB's financial director, said in a letter to Chemical, one of the agent banks, that the company's coal stock balances were hovering around 6.7 million tonnes "which is the permitted level with the current level of total outstanding term debt". He added that coal stock levels may dip below 6.7 million tonnes just before the end of May by 100,000- 150,000 tonnes.

So far the banks appear to have accepted that the reduction of coal stocks beneath the 6.7 million level should be treated as a technical breach only.

Chemical's David Wood wrote in a letter to the syndicate: "We will be monitoring the stock level issue but intend to treat any minor transgression of clause 41.1 . . . as a technical event only."

Yesterday he said that the banks remained comfortable about the current position, adding that "once again it looks as if Mr Scargill has got his timing disastrously wrong".

Under the strict conditions agreed between the company and its bankers, RJB has promised to keep coal stocks at certain levels depending on the amount of debt outstanding.

The more money the company repays its bankers, the more these levels can be reduced.