Coal bidder's firm left pounds 65m debts

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The Independent Online
RICHARD BUDGE, the Government's preferred bidder for the bulk of British Coal's mines, was for 25 years an employee and director of a family company which went into receivership two years ago, leaving unsecured creditors with losses of around pounds 65m, according to documents filed by the receivers Cork Gully.

Bankers link the failure of the company, A F Budge, to ill-judged investments outside its core business of mining and road-building. These included investments in yachts, racehorses, antique books, property developments and a collection of military hardware including a Scud missile and launcher.

The receivers, Cork Gully in Leeds, were appointed in December 1992, 10 months after Mr Budge resigned as a director. They said this week they had recouped most of the pounds 20m owed to banks. But the company's large band of unsecured creditors are unlikely to receive anything.

Mr Budge is now trying to raise about pounds 1bn from the City to finance the bid his company, RJB Mining, is making for the three English regions of British Coal. RJB Mining took over the Budge family's coal-mining interests in 1991. He is expected to launch a share issue next month and must finish the money-raising exercise, which involves nearly pounds 600m in bank loans and pounds 400m in new equity, by 24 December, the Government's date for completion.

The announcement of the Government's choice of RJB Mining as its preferred bidder for three of British Coal's English regions has surprised many in the coal and electricity industries, since its bid places a value on the mines that is believed to be 50 per cent greater than the next closest bidder, and appears to assume a much greater increase in production than many experts believe feasible.

From 1966 to 1992, Mr Budge was an employee and later a director of A F Budge, the main holding company for his family's business interests. By the time it went into receivership, the company had more than 50 subsidiaries.

They included such diverse activities as aviation, military hardware, arms dealing, marquees, and stud farming. The opencast mining operations were sold to the new company, RJB Mining, in 1991, in a deal financed by City venture capitalists.

A F Budge's receivers, Cork Gully, are still pursuing a disputed claim for pounds 1.7m against Richard Budge's brother, Tony Budge. Last year they agreed a pounds 325,000 settlement with Richard Budge for unrecorded payments to him by the company while he was a director.

The receivers have sent reports about the conduct of the directors, as they are obliged to, to the Department of Trade and Industry.

Mr Budge, who was in meetings yesterday with N M Rothschild, the DTI's advisers, declined to comment about his family's business affairs. An adviser for him said all the matters relating to the collapse of his family's company were satisfactorily explained to the City when RJB Mining was floated on the stock market in May last year.

A F Budge made large profits during the 1980s on road- building and opencast mining, but was badly hit by the recession. Banking sources say the receivership was caused by an inability to sell off peripheral assets at anything like book value. For example, the company invested about pounds 40m in two London properties which are unlikely to fetch more than pounds 10m.

Burning questions, page 17