Hg Capital linked to UK Coal

The private equity house has reportedly made a £160m offer for UK Coal, Britain’s largest coal producer.

Hg Capital, the UK-based private equity firm that earlier in the year changed its name from Mercury Private Equity following a buyout from Merrill Lynch, is thought to have tabled a 110p per share, or £160m, offer for UK Coal, the loss-making coal mining company.

According to the Sunday Telegraph Newspaper, which did not cite its sources, Hg is working with Richard Budge, UK Coal’s former chief executive, who is acting as a consultant to the firm.

The bidder is pressing HG Coal’s board to enter into formal talks over a possible takeover, the newspaper said. Hg was keen to conduct further due diligence on the company and had indicated it would pay a higher price if the numbers justified such a move, the report added.

On Sunday, a spokesperson for UK Coal told Reuters that no formal offer had been made to UK Coal, confirming that the company had been approached informally “some time ago.”

The miner, which is being advised by Credit Suisse First Boston, earlier this month reported a £10.8m pre-tax loss for the six month to June, up from a £10.2m loss in the same period last year, on turnover of £340m.

Early on Monday, shares in UK Coal surged rose over 18 per cent as investors piled into the stock following the report.

Hg Capital has not yet commented on the development. In a separate move, the firm announced today a $17.5m in Orbiscom, a provider in secure on-line credit and debit card payment technology. The transaction is HgCapital's third investment in businesses that provide critical e-commerce enablement software.