UK Coal where will it come from next ?

W.L Ross & Company, LLC was formed in April 2000 when Wilbur Ross, Jr. and bankruptcy advisory/investment team moved out of Rothschild Inc. to form an independent organization dedicated to managing distressed securities funds. The firm now manages more than $1.6 million of distressed security funds. WL Ross & Company LLC is headquartered in New York and has offices in Tokyo and Seoul.


The fund now has increased its ownership in UK Coal to 400,000 shares, or 3.3 per cent of the UK’s only sizeable coal producer. (and by now maybe even more)

Who is Wilbur Ross? (pic Wilbur and the 3rd Mrs Ros)Well his greatest successes have been in buying up steel companies – the most successful deal of which was announced on On the morning of Monday, October 25, 2004, when the business media was abuzz with news that Ross had struck a deal with Indian mogul Lakshmi Mittal to sell International Steel Group (ISG) for $4.5 billion. Shares of ISG immediately jumped, so that by the end of the day, Ross and other ISG shareholders were $545 million richer than they had been when the stock market closed on Friday.

This was after he claimed not to be an "asset flipper" and was investing for the future of the steel industry. A view he changed in what they call a New York minute.

More here

One commentator remarks ..

What honestly can be said about Wilbur Louis Ross is that he took a troubled business, shook it hard, and emerged laden with fruit. No distractions kept him from extracting maximum value from his assets; no balancing of his financial interests against the sacrifices made by many others. Just knife-blade bargaining and cutting-edge execution.

After declaring a loss of £30Mn in the first six months of the 2005 Financial year the Board of UK Coal (Mkt Cap today £209 Mn) reported …

A decline in sales volumes, partially offset by higher coal prices, led to a fall in turnover from continuing operations to £164.1 million (2004: £222.4
million). Coal sales fell to 4.8 million tonnes (2004: 7.4 million tonnes) as a result of a reduction in production to 4.6 million tonnes (2004: 7.2 million tonnes) reflecting colliery closures in 2004 and a reduction in surface mine output. Overall coal stocks held amounted to 369,000 tonnes (31 December 2004:647,000 tonnes).

In early November Tom Farmer of Kwik Fit fame finally announced he was no longer interested in taking over UK Coal.

UK Coal’s major shareholders , Phoenix, Morgan Stanley, Fidelity will no doubt be having interesting conversations with Mr Ross and his colleagues who are dedicated to “managing distressed securities funds.”

Drax, producers of 8% of UK electricity is due for listing this week by the American bondholders. Which should value the company they invested £1.3 Bn in 2 years ago at £ 2.3 Bn after having rejected several offers for the company.

Drax are of course heavily dependent upon UK Coal performing against the contracts for supply that they have with them. Mr Ross who has a slew of coal interests (His International Coal Group IPO's last week handing him a7 fold increase on his investment to date) might well of course be contemplating completing those contracts with coal inported into the UK and closing down the mines and selling off their above ground property assets.

Mr Blair must have a grim smile on his face when he sees how vital decisions about the UK energy supply are made by financiers in New York rather than politicians in London.

UK Coal shares closed at 141 p on Friday, having risen some 10% since Mr Ross's interest was announced.

Recent blogs on same topic here

Also you can read in Sunday's Scottish Daily Herald how Gordon Brown's proposed increased taxation of North Sea OIl has shafted new developments (the oil industry has a technical term - killing the goose that lays the golden egg).... and how enlightened industry / Government partnerships in Venezuela have done the reverse.