EUROPE – UK Coal's pension fund has paid £30m (€36.8m) for a 75.1% stake in the company's property business as part of a restructuring deal that splits it from the firm's riskier deep mining operations.

The restructuring arrangement, which will protect the value of a largely brownfield portfolio, includes a clause that will protect the value of the property business from the pension scheme's liabilities.

UK Coal, which will hold onto the other 24.9% of the property business, has a £450m pension deficit.

The firm has halved its bank debt over the past two years as a condition of the restructuring.

Harworth Estates comprises land over former colliery sites – secondary locations with potential for conversion to light industrial and commercial.

Despite a weak secondary market, the business is under no immediate pressure to sell newly completed assets or those in development.

Proceeds from the sale of the shareholding will go towards funding value-adding initiatives across the portfolio, which includes a project to build 4,000 residential units within a 700-acre mixed-use scheme in Sheffield.

PwC, which arranged the restructuring, said it had kept the pension fund out of the Pension Protection Fund (PPF), a statutory body set up in 2004 to compensate members of insolvent schemes.

Meanwhile, the pension scheme is understood to be confident that the value of the business will support its long-term liabilities, although the scheme's secretary declined to comment today.

UK Coal chairman Jonson Cox in a note to the market described the restructuring as of "unprecedented scale and complexity".

A newly established employee benefit trust will hold 67% of shares in the mining business.