Coal news and updates

Czech billionaire Zdenek Bakala is going all-in to salvage what’s left of coal miner New World Resources Plc as he asks investors to choose between a severe haircut and bankruptcy.

 

The company, controlled by Bakala’s BXR Mining NV, is threatening bondholders and shareholders with the fire sale of almost all assets unless they approve its restructuring plan that would increase the number of shares 25 times and force creditors to accept a reduction of their debt holdings.

 

NWR invited offers for its mining units OKD AS in the Czech Republic and NWR Karbonia SA in Poland yesterday, boosting speculation it will go out of business. Proceeding with the sale “could leave certain categories of stakeholders with minimal or no recoveries,” the company said. The shares slumped 26 percent to a record low in Prague.

 

“The pressure on bondholders is clearly growing, and they’re running out of time,” said Marek Hatlapatka, an analyst at Brno-based brokerage Cyrrus AS. “It will be very difficult to attract any acceptable offers for the assets.

 

The company said it will scrap the auction if the required majority of bondholders and shareholders accept its slightly altered debt-restructuring plan, first announced a month ago. It has named PricewaterhouseCoopers LLP as a prospective insolvency administrator in case the plan isn’t accepted.

 

De-Facto Liquidation

 

The sale ‘‘would represent the de facto liquidation of the company,’’ Josef Nemy, an analyst at Komercni Banka AS in Prague who has a sell recommendation on the stock, said yesterday. ‘‘In that case, existing shareholders couldn’t expect to get a portion of the sale proceeds.’’

 

Under the revised program, bondholders would accept a haircut on their holdings and NWR would sell new equity rights to some existing shareholder and bondholders, increasing the number of shares 25 times. Bakala’s BXR, which owns a majority of NWR, would buy 75 million euros ($102 million) of the new stock.

 

NWR posted six straight quarterly losses after coal prices fell and the Czech government forced the company to keep its money-losing Paskov mine open longer than planned.

 

Bakala, whose worth is estimated at about $1 billion by Forbes, gained control over the Czech mining company OKD, the biggest employer in the industrial northeastern Ostrava region, in 2004 and then founded NWR, which sold shares in an initial public offering in May 2008. The stock price peaked later that year and has since plunged 99 percent.

 

The billionaire drew fire from labor unions and the government for a plan to close its Paskov mine in the eastern Czech Republic. In April, NWR agreed to keep the shaft, which employs 3,000 workers and loses $80 million each year, open until 2017.

 

 

Source: Bloomberg