News Archive

18 May 2006

Acquisition of A Ogden & Sons Limited

ATH Resources plc (AIM:ATH.L), one of the UK’s largest coal producers, today announces that it has completed the acquisition of A Ogden & Sons Limited (“Ogdens”), part of the Ogden Group of Companies. Based in Doncaster, Ogdens operates as a highly successful coal recovery, land remediation and regeneration business with a particular focus on colliery spoil heap reclamation projects. It has been acquired from Sir Robert Ogden CBE LLD.

ATH Resources has agreed to pay total consideration of £25.4 million for Ogdens including £15.9 million in respect of cash being retained within the business. The acquisition has been funded by a new £5.5 million two year term loan provided by Royal Bank of Scotland (“RBS”) and by utilising the Group’s existing overdraft facility, which is being extended by a further £2 million, to cover the acquisition price. £1 million of the consideration is in the form of a deferred payment with £0.5 million payable in six months and a further £0.5 million payable in twelve months.

During 2005, Ogdens operated at more than one site and was able to produce an operating profit of £4.1 million from turnover £14.2 million. Following the successful completion of a site in 2005, only one Ogdens site is in operation and consequently turnover is expected to be lower in the current year.

ATH Resources has acquired plant and equipment, with a book value of £3.7 million, which includes the washing, processing and pressing technology that extracts and cleans the coal into a saleable product that is suitable for electricity generators. The value of this equipment, were it to be replaced, is estimated at approximately £20 million.

Ogdens ’ core revenue stream comes from coal washing and processing. This process enables Ogdens to gain revenue from saleable coal recovered from former colliery spoil heaps thus helping facilitate and accelerate much needed land reclamation projects. Often, further project revenue is generated from ‘clean-up’ contract payments by land owners or through end-of-life redevelopment value. Ogdens is currently the only independent company in the UK market that assists in the reclamation process by being able to offer customers, whether they be colliery owners, Local or Regional Development Authorities (“RDA”) additional revenue that can help to offset the considerable cost of land regeneration.

Ogdens ’ 99-strong workforce, which ATH will continue to employ, and its team of specialist consultants, can assess projects and design land forms for a variety of alternative planning requirements and after-uses such as residential and commercial, in order to obtain the best possible, most advantageous planning consents. Additionally, it is anticipated that Ogdens’ specialist coal washing plant knowledge and skills base will be able to enhance the Group’s existing coal preparation operations.

ATH Resources will continue to operate Ogdens current contract at New Park Springs Tip in Grimethorpe, South Yorkshire for the next two years of its projected operating life. It will also gain excellent relationships with the owners and providers of potentially important coal washing projects such as RDAs, local authorities and companies involved in the coal industry. Ogdens currently has a number of pipeline project opportunities which, complemented by ATH Resources’ successful development team, should enable the enlarged Group to expand its operations throughout the UK, in an environment where considerable emphasis is currently being placed on the land regeneration process.

Commenting on the acquisition, Tom Allchurch, Chief Executive of ATH Resources, said: “The obvious synergies between Ogdens and ATH Resources make this an excellent acquisition for the Group. Not only is it earnings enhancing from day one but it also allows us to diversify our business into the increasingly important field of land regeneration whilst introducing the Group into new geographical areas.

“The enlarged Group will focus on maximising the value of this acquisition through developing new opportunities that are now available to it.”

 

For further information:
ATH Resources
Tom Allchurch, Chief Executive	Tel: +44 (0) 1302 760 462
tom.allchurch@ath.co.uk
Seymour Pierce Limited
Sarah Wharry / Jeremy Porter, Corporate Finance	Tel: +44 (0) 20 7107 8000
sarahwharry@seymourpierce.com	www.seymourpierce.com
Deloitte Corporate Finance
Roger Esler	Tel:+44 (0)113 243 9021
Media enquiries:
Abchurch
Henry Harrison-Topham / Sarah Hollins	Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com	www.abchurch-group.com

 

Notes to Editors:

ATH Resources plc is an AIM-listed operator of opencast coal mines in the UK with its current three operational mines, Skares Road, Garleffan and Grievehill, located near New Cumnock, East Ayrshire in Scotland. The Group is currently the third largest producer of coal in the UK producing approximately 1.5 million tonnes per annum. Coal was used to generate 32.7 per cent of the UK’s electricity in 2004 and the Group holds coal supply contracts with four of the UK’s main electricity generating companies.

The management team has been in place since 1998. It acquired the rights to operate (and subsequently acquire) the Skares Road mine with support from The Alchemy Plan and Bank of Scotland. Following ATH Resources’ incorporation in October 2003, and backed by a follow-on investment from The Alchemy Plan, the Company acquired the Garleffan mine in November 2003.

In June 2005, the Group acquired two new opencast sites, Grievehill and Glenmuckloch in Scotland for £18 million using the £16.8 million raised by way of an Open Offer on the basis of 1 New Ordinary Share for every 3 Existing Ordinary Shares. The acquisition increased the Group’s reserve base by 160% and provided longer term stability to the business.

In addition to its operating mines, the Group also has a number of other coal mining projects in Scotland and two through its French subsidiary, SRMMC, including a series of six existing coal concessions in south-central France covering an area of 36km ² , with an estimated resource of approximately 4.5 million tonnes of recoverable coal.

ATH Resources listed on the AIM market of the London Stock Exchange in June 2004.

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