UK Coal collapsed after a devastating fire in March closed its Daw Mill pit in Warwickshire
A deal to save 2,000 jobs at eight UK coal mines has been announced as their owner went into administration.
UK Coal collapsed after a devastating fire that closed its Daw Mill pit in Warwickshire in March but a restructuring has seen the remaining mines taken over with the backing of Britain's pension rescue scheme.
The closure of Daw Mill sees 350 workers being made redundant but another 120 have been transferred to other sites, said the company, which supplies 5% of the UK's energy needs.
The deal also largely protects payments for 7,000 pension fund members. All of those who are already collecting their pension will continue to receive it at the same level while around 3,000 yet to retire will receive 90%, said a spokesman for the Pension Protection Fund (PPF). Other current employees belong to a separate, defined contribution scheme and will be unaffected.
The future of the mines came under threat after the disastrous fire at Daw Mill, which represented around a third of UK Coal's revenues. Under the restructuring, the viable parts of the business will be held in individual companies owned by a new business operated as UK Coal Production. A new employee benefit trust is expected to run the business.
Kevin McCullough, chief executive of UK Coal, said: "Today is very much a day of mixed emotions, but this is the best outcome that it was possible to achieve. Entering administration and the subsequent restructuring was the only way we could preserve any of the business and while I'm delighted we've saved 2,000 jobs, we've also had to make some very difficult decisions.
"I'm pleased that we managed to transfer 120 of our Daw Mill colleagues to our other mines following the fire. Our thoughts today also rest with the 350 colleagues who will now, regrettably, be made redundant as a result of Daw Mill closing."
David Kelly, of administrator PwC, said the deal "guarantees continued supply of electricity to the UK and keeps the lights on".
Martin Clarke, PPF's executive director for financial risk, said: "By taking on the scheme, we will now protect the pensions of its 7,000 members and they will receive PPF compensation, either now or in the future, to provide them security in retirement.
"The agreement also means that we will receive regular payments from the company which we expect to produce a higher return in the long run than if the company had simply been allowed to collapse into insolvency. This is good news both for our members and our levy payers."
Source: http://money.uk.msn.com/news/deal-saves-2000-coal-mine-jobs-2
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