Shadow over RJB after mining group ends takeover talks with Renco of US

THE FUTURE of RJB, Britain's biggest coal producer, was thrown into doubt once more yesterday after the company ended takeover talks with the US group Renco. The deal would have valued RJB at 75p a share or £109m.

THE FUTURE of RJB, Britain's biggest coal producer, was thrown into doubt once more yesterday after the company ended takeover talks with the US group Renco. The deal would have valued RJB at 75p a share or £109m.

Shares in RJB fell 27 per cent to 46.5p on the news, valuing the company at just £68m. Four years ago it was worth almost £900m.

Without naming the bidder, RBJ said it had terminated the talks because Renco had failed to meet a deadline set several weeks ago to confirm its interest in making an offer, at what price and that it had the finance available.

A spokesman added: "What we have been trying to do is prise some action out of them but try as we and our advisers might, we just could not get any sort of commitment. We decided on that basis there was no option but to pull the plug."

RJB added that discussion of the offer had been distracting its management from the business of running the company. RJB began serious talks with Renco in mid-June having received an initial approach from the US company in March.

RJB is now waiting on European Commission approval for a £70m subsidy from the Government to secure continued production at its 13 deep mines. The group operates a similar number of open-cast mines.

A decision from Brussels is expected by the end of this month and RJB said it did not anticipate any objections since failure to approve the UK subsidies would place a question mark over the £3bn in state support the German and Spanish governments are giving their coal industries.

RJB said that following the failure of the takeover talks it would concentrate on returning cash to shareholders both from its mining operations and the sale of surplus property from its 50,000 acre land bank.

The group has 8,000 employees and produces around 20 million tonnes of coal a year. In anticipation of approval for the £70m grant, it is keeping open its loss-making pits at Ellington in the North East and Clipstone in Nottinghamshire. Between them the two collieries employ 3,000.

The spokesman said that the outlook for RBJ had improved with international coal prices up by 20 per cent this year. It also had a good forward order book and low levels of borrowing. In the last half year, however, RJB lost £10.2m after losses of £17m on its deep mines. This was caused by the low prices on contracts struck with electricity generators and underperformance at some pits, in particular Daw Mill in Warwickshire.