New World Resources Plc. (NWR), an unprofitable Czech supplier of steelmaking coal, headed for the biggest four-day rally in more than four years after the company said it will sell assets to pay for debt.
The stock jumped as much as 10 percent, extending a four-day surge to 32 percent, the biggest such advance since May 2009. It climbed 4.6 percent by 10:42 a.m. in Prague, the most in the PX index, which fell 1.5 percent.
The Czech miner invited bids for its OKK coking-coal subsidiary, the Paskov mine and other assets, it said today in a regulatory statement. It has 578 million euros ($749 million) of debt coming due in 2018, according to data compiled by Bloomberg. Jastrzebska Spolka Weglowa SA is among the “many” European companies invited by NWR to analyze assets put up for sale, PAP newswire reported July 1, citing the Polish mining company’s chief executive officer, Jaroslaw Zagorowski.
“JSW is a logical buyer,” Petr Bartek, an analyst at Erste Group Bank AG, said in a telephone interview. “The coking unit is an interesting asset, while the Paskov mine is old and probably losing a lot of money. I can imagine someone buying the two assets together as most of Paskov’s coal is processed by OKK.”
NWR first signaled the possibility of asset sales in May, after posting a 80.3 million euros loss in the first quarter.
“The first-quarter results reveal elevated cash burn,” Roger Bell, a JPMorgan Chase & Co. analyst in London, wrote in a report to clients May 16. “We anticipate the business should be able to manage until 2018, at which point an about 500 million-euro bond maturity presents very challenging refinancing risk.”
Moody’s Investors Service downgraded NWR’s debt rating to B2 with a negative outlook on May 29, saying its operating performance has worsened in recent quarters as a result of a prolonged deterioration of the coal market.
NWR’s shares tumbled 74 percent in the three months ended June 30, the steepest quarterly slump since at least September 2008, as a recession in the Czech Republic and the euro area damped demand from steelmakers.
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