Prague - New World Resources (NWR), a heavily indebted Czech coal mining holding company, is talking to creditors on a debt restructuring. If the two sides fail to reach an agreement, NWR may decide to sell its flagship asset, the OKD coal mining company, and possibly also its Polish subsidiary NWR Karbonia.
NWR announced the debt restructuring talks earlier today before the start of stock trading. The company says it will decide on further steps by the end of September.
According to information available to NWR, 62 percent of the holders of secured bonds and 37 percent of the holders of unsecured bonds agree with the debt restructuring plan. However, NWR needs to secure the support of at least 75 percent of each group. If it fails to achieve this, it may be forced to sell OKD.
NWR's financial problems have been caused above all by falling coking coal prices. While the company was selling the fuel to its customers on average for EUR 181 a ton in 2011, in the first half of 2014 the price dropped to less than a half – EUR 88 a ton.
The company even planned to close one of its mines, Paskov, but eventually reached an agreement with the government to keep it operating until 2017. In exchange, the government has agreed to spend CZK 600 million (EUR 21.9 million) on social programs for miners.
NWR's stock dropped 13 percent to CZK 7.8 after the announcement, reported Bloomberg.
Almost two thirds of NWR's shares are controlled by the BXR investment company. Entrepreneur Zdenek Bakala has an approximately 50 percent stake in BXR.
Disclaimer: Zdenek Bakala, a part-owner of NWR, is also the owner of Centrum Holdings, which publishes Aktualne.cz.
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