British Coal

HC Deb 02 December 1994 vol 250 cc939-40W

Mr. Peter Ainsworth

To ask the President of the Board of Trade if he will make a statement on progress in discussions with the preferred bidders for the regional coal companies in the privatisation of the mining business of British Coal.

Mr. Eggar

Discussions with each of the preferred bidders—RJB Mining plc, Celtic Energy Limited and Mining (Scotland) Limited—are on course to be concluded this month.

Each of the bids has been subject to a detailed process of clarification and negotiation since preferred bidders were announced on 12 October.

The Government have agreed with RJB, subject to contract, that RJB will acquire the English Coal Company and Thorne and Ellington collieries for £815 million; £698.1 million would be payable at completion, with the balance payable, with interest, in instalments over the three following years.

The Government have agreed with Mining (Scotland) Limited, subject to contract, that Mining (Scotland) Limited will acquire the Scottish Coal Company for £39.4 million and an additional consideration, which may amount to up to £10 million, mainly for increased levels of coal stocks.

In both cases, the bid price has been adjusted as envisaged in the information memorandum. The adjustments reflect developments since tenders were submitted in September 1994 or information which was not available to bidders at the time. In the case of RJB, the bulk of the adjustments relate to changes in expected levels of coal stocks, and liabilities disclosed after bids were submitted. RJB's bid price following these adjustments still clearly represents best value for money. This is also the case for Mining (Scotland) Limited.

The Department will shortly lay minutes before the House describing certain limited warranties and indemnities which it proposes to give to RJB and Mining (Scotland) Limited. The question of possible warranties and indemnities is also under discussion with Celtic Energy Limited.

The acquisition price for all three preferred bidders would also be subject to technical adjustments following completion to take account of differences between the value of certain assets and liabilities as estimated at signature of the acquisition agreement and the corresponding value to be established as at completion.

Discussions are continuing with Celtic Energy Limited.