‘Coal King’ seeks to renegotiate debt after firms denied state assistance

Two companies belonging to Victorino Alonso, the so-called of Spain Unión Minera del Norte (Uminsa) and Coto Minero Cantábrico are seeking to renegotiate their debts after the government rejected a request from them for state aid.

In a statement released Thursday, Uminsa and Coto Minero said they have declared themselves in pre-receivership, a period during which under Spanish bankruptcy regulations companies have three months to try to renegotiate their debt with creditors.

The companies, which form part of the largest private coal-mining group in Spain, were seeking state aid worth 49 million euros; 29.3 million for Uminsa and 19.8 million for Coto Minero. Their request was denied by the Industry Ministry because they had fallen behind in payments due to the Social Security system.

The companies also said they expected lower coal sales this year, while a dispute with electricity producers over prices and the quality of coal to be purchased had prevented them from obtaining revenues.

If companies fail to reach an agreement with creditors within the three-month period stipulated by the law, they thereafter automatically go into receivership.

Uminsa and Coto Minero are also facing a lawsuit filed by the state-owned coal company Hunosa last month over the disappearance of 528,000 tons of coal owned by Hunosa and stored in deposits controlled by the Alonso group under the terms of the Strategic Temporary Storage of Coal program. The Alonso group, the largest private coal business in Spain, claims the missing coal, which is valued at 46 million euros, was “lost because of the rain.”

According to information filed with the company registrar, both of the companies made profits in 2011: 3.3 million euros in the case of Coto Minero and 3.5 million in the case of Uminsa. At the end of 2011, Uminsa had liabilities of 108 million euros and Coto Minero 67.1 million.

The companies are also in the process of reducing their labor forces. “We’re very worried about the pre-receivership,” Antonio Fernández, a UGT labor union official, said Thursday. “Receivership would mean the end of the company.” The Alonso group in January unveiled plans to reduce its workforce to 1,434 from 2,158 at the end of September of last year. “We fear more layoffs or salary cuts,” Fernández said.

The future of the coal industry in Spain is under a dark cloud. The Industry Ministry has announced that under an agreement with the European Union state aid to coal-mining companies and to power utilities that purchase it will cease in 2015.

The statement released by the companies said the decision to go into pre-receivership should “in no way be interpreted” has a way of putting pressure on the government to reconsider its decision on state aid.