View from City Road: All uphill on British Coal

Hanson gave it the once over. So did RTZ and a number of other highly experienced international mining houses. All of them pulled out. By the end the Government was down to just a handful of 'serious' contenders for privatisation of British Coal. The winner, for the English pits, is RJB Mining, a small opencast mining company listed on the stock market only last year. To carry out the transaction, RJB is proposing to raise approximately pounds 1bn in the City - 60 per cent of it debt, 40 per cent equity. Can this be for real?

According to BZW, which is raising the money, and Richard Budge, who runs the company, certainly it can. Those who cannot see a profitable future for the remnants of Britain's coal mining industry are just blind, stupid or both. Certainly they have a point when they insist that nobody could possibly do a worse job than British Coal. If even British Coal can make some money out of them, the possibilities must be almost endless.

Convincing the investing public of it may none the less be an uphill task. The Government may yet have to eat its words over the privatisation of British Coal, for the whole thing is dependent on BZW's ability to raise the money. This is not yet a done deal. Who is Mr Budge, this aspiring coal baron, anyway? Does he really know what he is doing? And is it safe to structure the finance in such a leveraged manner? This, as they say, is going to be a somewhat demanding prospectus.