Hargreaves-Maltby

Soon after flotation, Hargreaves identified the opportunity to make a major strategic move that would help secure its position in the energy and mineral markets. The chance to acquire Maltby Colliery, a unique specialist coal mine, would deliver significant synergies for the Monckton coke operation and support Hargreaves’ power generation contracts. This was part funded by an equity placing that raised £11.1m of new money at no discount to the prevailing market price.

The opportunity to acquire Maltby Colliery arose following a review of UK Coal’s mining operations. Although not profitable, the colliery was relatively well invested and had significant proven extractable reserves - 10.4m tonnes of high quality coking coal – equivalent to eight years of production. Being the operator of the UK ’s only independent coke works and an integral part of the power generation supply chain, Hargreaves was uniquely positioned to extract maximum synergies from the mine.

Hargreaves acquired the operation at its net asset value of £29m. New contracts were entered into with the power generation industry that substantially de-risked the proposal. Maltby offered further upside potential if Hargreaves’ entrepreneurial management actions could unlock other commercial opportunities.

The consideration of £21m was funded equally between cash and debt. Following a road show to key institutions shares equivalent to 10% of the existing share capital were placed with new and existing investors. Demand was extremely strong and the £11.1m of new money was raised without any need to apply a discount. Due to the strength of the demand some shares were sold on behalf of a number of the executive team.