Mining company New World Resources (NRW) is preparing for the possible sale of daughter companies, including the Ostrava-based coal producer OKD, it was reported on Wednesday. OKD has around 12,000 employees and runs four mines in the Czech Republic, including the Paskov mine in North Moravia, which it plans to close in three years’ time.
NWR, which is among Central Europe’s leading producers of hard coal for coke, says it will attempt to offload its daughter companies if it fails to reach agreement with share and bond holders on the conditions of a capital restructuring by this September.
The Netherlands-based company needs 75 percent of lenders to agree to the conditions, its spokesman Petr Jonák told the Czech News Agency. At present, 63 percent have given the plan their backing, he said, adding that the firm expects to win sufficient support for a consensus agreement.
However, said Mr. Jonák, NWR’s board of directors are duty bound to be prepared for all eventualities and possible developments. He insisted that whatever happens there will be no impact on the day to day running of OKD (from Ostravsko-karvinské doly; Ostrava-Karviná Mines) or Poland’s Karbonie, another daughter company. Regardless of this assurance, NWR’s shares fell to their lowest price ever on the Prague Stock Exchange on the back of Wednesday morning’s news.
NWR’s problems stem from a steep fall in coking coal prices on world markets. While in 2011 it was bringing the company EUR 181 a tonne on average, in the first of this half year the price had plummeted to EUR 88 on average.
Those losses have spurred NWR to propose to lenders a debt restructuring and a new share issue in a bid to stave off insolvency. At the start of last month the company said that under an agreement with lenders its debt would fall by EUR 325 million to EUR 450 million and that it planned to raise its capital by EUR 185 million.
In September last year NWR’s OKD announced plans to close the Paskov mine in Frýdek-Místek, the last active mine in the Ostrava region, as it was making a loss and likely to remain uncompetitive in the medium term. Paskov – which produced 950,000 tonnes of hard coking coal a mere two years ago – has a staff of around 2,500 and is one of the region’s most significant employers.
At the start of June the Czech government signed an agreement with NWR guaranteeing state support in the process of winding Paskov down. Under the deal the coal company said it would keep the mine open until 2017 and cover the cost of site clearance while the state pledged to put CZK 600 million into social programmes for the miners being laid off. It is not yet clear how the possible sell-off of OKD would impact that deal.
NRW is based in Amsterdam and is quoted on the London, Prague and Warsaw stock exchanges. It is two-thirds owned by the company BXR, which is roughly half-owned by Czech billionaire Zdeněk Bakala.
Terminal 2 at Prague‘s Vaclav Havel Airport evacuated due to bomb threat
Bestselling guidebook maps some of Prague’s quirkiest sites
Czech nobility under the spotlight in tv series
Grand Café Orient in Prague–the only Cubist café in the world
Business prodigy brings US-style schools to Czech Republic