New World Resources Plc (NWR) declined to a record after Moody’s Investors Service downgraded the unprofitable Czech miner on expectations its financial condition will worsen as coal prices struggle to recover.
The shares slumped 6.9 percent to 17.50 koruna by close in Prague, the steepest drop in the 13-member PX index and the lowest close since the start of trading in May 2008. NWR has slumped 81 percent in the past six months, the most among 16 sector peers tracked by Bloomberg.
Moody’s cut the corporate family rating to Caa1, nine steps below investment grade, from B2, it said in a statement today. NWR is preparing asset sales to shore up finances after a drop in coking-coal prices triggered an 80.3 million-euro ($106 million) loss in the first quarter. The average price of the commodity agreed with customers for the third quarter declined 8 percent from the previous three months, NWR said on July 18.
“Today’s downgrade of NWR’s ratings follows further worsening in the coal price environment” and “our expectations that market conditions will remain challenging over the next 12 to 18 month,” Paolo Leschiutta, a Moody’s analyst in Milan, wrote in the statement. “Depressed market conditions will make it more challenging for the company to contain cash flow deterioration during the rest of 2013 and next year.”
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